CHAPTER ONE

2.0     INTRODUCTION

1.1     BACKGROUND TO THE STUDY

The need for marketing life assurance services in rural areas in Nigeria is an issue which it’s benefit or importance cannot be over emphasized.

Research has shown that the problems encountered by the marketers (Intermediaries) of life assurance in rural areas have impacts on the growth of insurance level in our society. There is a wilde spread of lack of understating of what benefit it is to the society. Research has also shown that there is a significant relationship between the extent to which one understands and the importance one attaches to life assurance or product the most clear and understandable one finds insurance service to be the most likely it is that the problem of marketing life assurance policies in rural areas in Nigeria can be easily solved. This shows that low level of literacy constitutes to the problem encountered by life assurance intermediaries in marketing of life assurance in rural areas in Nigeria. Marketing of life assurance policies  in rural areas involves the social and managerial processes through which financial institutions (i.e. Insurance Companies) create and attempt to satisfy the various financial needs of their customers by offering them different financial products and services at the capital and money markets. It is also seen to be a system of business activities designed to plan (product) price, process, promote, distribute (place) and showing physical evidence on something of value that is essentially intangible that does not result in the ownership of anything to the benefit of the market: present and potential household consumers industrial user for a fee, as adopted in the definition of Ekwuaner, (2001:2).

Moreover, life assurance business in rural area is a service oriented activity that does not follow exactly what is obtained in real physical product service marketing, it is a concept that deals with economic consequences of transferring risk therefore, buying life assurance  protection constitutes an important  element in risk management. Insurance performed under a legal contract, upon which the insurer promises to compensate the insured in the case of occurrence of accidental loss specified in the policy or contract. Life assurance implied according to Egbute, (2007), as an agreement between the insured who pays the premium and the insurer for financial loss incurred for the specified risk, Also Hansell, (1985) defined insurance as a social device providing financial compensation for the effect of misfortune, the payment being made from the accumulated contribution of all the parties participating in the scheme. In the opinion of Chand (1979), insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of person who are exposed to it and who agree to insure themselves against that risk. Also J.L fiiwe (2004) from his point of view, Insurance is an arrangement by which an insured transferred his risk to the insurer at an adequate fee call premium on promise that the insured shall be indemnified or compensated upon the occurrence of the insured event. Therefore, from the above definition life assurance, is a financial service organization that provides intangible product or service to the entire pubic (ie individual and organization), in order to provide financial compensation for the effect for misfortune or fortuitous event based on the fact that the life assurance service are intangible. It is difficult for insurance to exist or function effectively without marketing because marketing plays a pivotal role in the existence of insurance.

Marketing as it was propounded by Kotler (1972:13) is the analysis, planning implementation and control of programmes designed to bring about desired exchange with target audiences for the purpose of personal and mutual gain. It relies heavily on the adaptation and coordination of product, price promotion and place for achieving effective response. It consists of individual and organizational activities, aimed at facilitating and expediting exchanges within a set of dynamic environment. According to Anyanwu (1993) marketing also consists of business related activities that seek to anticipate demand, help in developing and marketing the goods and services available to the satisfaction of consumers or users and at a profit to the organization.

Furthermore, life assurance service consists of the various policies or protections offered by a life assurance company such service rendered by life assurance company consist of the following as listed, in the insurance Act, 2003:

1.       Term-life assurance

2.       Whole-life assurance

3.       Endowment assurance

4.       Money back plan

5.       Family income benefit

6.       Credit life assurance

7.       Key man assurance

8.       Unit-linked insurance policy

9.       Children policies

10.     Partnership assurance

11.     Joint-life assurance

The experience which some people who have been dealing with insurance over the years has not been very cordial. Such unfavourable relationship has been publicized over the years, that it has created a poor perception of life assurance service and the life assurance companies have not help issues by the reticent in publishing their activities. One has to be aware of life assurance before one can make a conscious effort in purchasing it’s product. The insurance industry has the duty to create awareness of the product and their industry in the mind of the public. The inability of some individual life assurance companies to let the public know that their products or policies exist and what function they perform, in rural areas in Nigeria has culminated a major problem in marketing of life assurance policies in rural areas like Ogoni, Etche, and Rumulomeni.

1.2     STATEMENT OF PROBLEMS

Inspite of the fact that life assurance plays a beneficial role to the survival of businesses in Nigeria and elimination of poverty in the society entirely, yet there is low patronage of life assurance polices in the rural areas in Nigeria. Research has shown that 85% of the people in urban areas in Nigeria  respond to the purchase of life assurance policies while 15% of the people in rural areas do not respond. This is so because of the various factors responsible for the low patronage of life assurance policies in rural areas.

The Nigeria insurance year book (1989) reports that one of the interesting development in urban areas in Nigeria, i*-s the growing interest and full participation of the insuring pubic and most life assurance companies embarking on life assurance activities. This could be attributed to the understanding of the benefit of life assurance as it serves as a useful device for solving complex social problem, such as compensating victims of industrial accidents (workmen’s compensation insurance) and life assurance plays an active role in the field of finance .Their influence has been greatly felt in the investment and financial market of the world. All the above benefit are not experienced in the rural area where the need for life assurance should be more considering the risk faced by it’s residents like, death to a bread winner caused accident etc.

Based on the above realities, this study is carefully designed to investigate the problem encountered by the life  assurance intermediaries in the marketing of life assurance policies in rural areas in Nigeria and also to proffer solution to the identify problems.     

1.3     PROPOSE OF THE STUDY

This study is aimed at investigating the problems of marketing life assurance policies in rural areas in Nigeria other specific objectives to be accomplished includes: 

1.       To ascertain the benefits of marketing life assurances policies in rural areas in Nigeria

2.       To investigate the problems of marketing life assurance policies in rural area in Nigeria

3.       To proffer solution to the identified problems associated with the marketing of life assurance policies in rural areas in Nigeria.

1.4     RESEARCH QUESTIONS

In order to effectively and carefully carryout this research the following questions were raised.   

1.       What are the benefit of marketing life assurance policies in rural areas in Nigeria?

2.       What are the problems of marketing life assurance policies in rural areas in Nigeria?

3.       What are the likely solution to the identified problems in marketing life assurance policies in rural areas in Nigeria?

1.5     SIGNIFICANCE OF THE STUDY

This study will be of immense value or beneficial to life assurance companies and their intermediaries because it will increase their knowledge of the problems of marketing life assurance policies in rural areas and aid them in adopting strategies to overcome the identified problem and will also help students for further research or in their academic furtherance.

It is believed that this study will go a long way in educating the people in rural area in Nigeria, and enlighten them on the benefits of purchasing life assurance policies. It ensures that the financial growth of life assurance companies are met.

Moreover, this study will go a long or will reveal the importance of life assurance to the entire society both urban cities and rural areas. Having mentioned the beneficial role played by life assurance companies in the survival of business and individual within the society. It is as difficult like and uphill task for one to live without life assurance because man by nature is exposed to different kinds of risk which it’s occurrences, are very fortuitous in nature. They are other areas where this study will be useful such as brokerage firms, financial institutions and universities and colleges where life assurance is been studied.          

1.6     SCOPES OF THE STUDY

The scopes of the study is to investigate into the problems of marketing life assurance policies in rural areas in Nigeria like Ogoni, Etche, and Rumulomeni. It is delimited to term life assurance and whole life assurance policies. 

1.7     DEFINITION OF TERMS

1.       LIFE ASSURANCE: Is a contract between the policy holder and the assurer, where the assurer agrees to pay a sum of money (benefit) upon the occurrence of the assured’s death or other events such as terminal illness or critical illness in return of the payment of a stipulated amount called premium at regular interval or in lump sum by the assured.

2.       MARKETING: Are activities of a company associated with buying and selling a product or services it includes adverting selling and delivering product to people.

3.       RURAL AREAS: This refer to as an areas outside of cities and towns. It is non-urban areas that is pertaining to less populated.

4.       PROBLEM: This refers to as difficulty or inferences in the existence of a particular thing or it’s progress.

5.       RESEARCH: This refers to as a careful study of a specified subject matter with the intention of discovering new facts and information about it.

6.       COMPANY: This refers to as business organizations that make money by producing and selling goods and services.

7.       ASSURED: The person whose life is the object of the insurance policy.CHAPTER ONE

2.0     INTRODUCTION

1.1     BACKGROUND TO THE STUDY

The need for marketing life assurance services in rural areas in Nigeria is an issue which it’s benefit or importance cannot be over emphasized.

Research has shown that the problems encountered by the marketers (Intermediaries) of life assurance in rural areas have impacts on the growth of insurance level in our society. There is a wilde spread of lack of understating of what benefit it is to the society. Research has also shown that there is a significant relationship between the extent to which one understands and the importance one attaches to life assurance or product the most clear and understandable one finds insurance service to be the most likely it is that the problem of marketing life assurance policies in rural areas in Nigeria can be easily solved. This shows that low level of literacy constitutes to the problem encountered by life assurance intermediaries in marketing of life assurance in rural areas in Nigeria. Marketing of life assurance policies  in rural areas involves the social and managerial processes through which financial institutions (i.e. Insurance Companies) create and attempt to satisfy the various financial needs of their customers by offering them different financial products and services at the capital and money markets. It is also seen to be a system of business activities designed to plan (product) price, process, promote, distribute (place) and showing physical evidence on something of value that is essentially intangible that does not result in the ownership of anything to the benefit of the market: present and potential household consumers industrial user for a fee, as adopted in the definition of Ekwuaner, (2001:2).

Moreover, life assurance business in rural area is a service oriented activity that does not follow exactly what is obtained in real physical product service marketing, it is a concept that deals with economic consequences of transferring risk therefore, buying life assurance  protection constitutes an important  element in risk management. Insurance performed under a legal contract, upon which the insurer promises to compensate the insured in the case of occurrence of accidental loss specified in the policy or contract. Life assurance implied according to Egbute, (2007), as an agreement between the insured who pays the premium and the insurer for financial loss incurred for the specified risk, Also Hansell, (1985) defined insurance as a social device providing financial compensation for the effect of misfortune, the payment being made from the accumulated contribution of all the parties participating in the scheme. In the opinion of Chand (1979), insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of person who are exposed to it and who agree to insure themselves against that risk. Also J.L fiiwe (2004) from his point of view, Insurance is an arrangement by which an insured transferred his risk to the insurer at an adequate fee call premium on promise that the insured shall be indemnified or compensated upon the occurrence of the insured event. Therefore, from the above definition life assurance, is a financial service organization that provides intangible product or service to the entire pubic (ie individual and organization), in order to provide financial compensation for the effect for misfortune or fortuitous event based on the fact that the life assurance service are intangible. It is difficult for insurance to exist or function effectively without marketing because marketing plays a pivotal role in the existence of insurance.

Marketing as it was propounded by Kotler (1972:13) is the analysis, planning implementation and control of programmes designed to bring about desired exchange with target audiences for the purpose of personal and mutual gain. It relies heavily on the adaptation and coordination of product, price promotion and place for achieving effective response. It consists of individual and organizational activities, aimed at facilitating and expediting exchanges within a set of dynamic environment. According to Anyanwu (1993) marketing also consists of business related activities that seek to anticipate demand, help in developing and marketing the goods and services available to the satisfaction of consumers or users and at a profit to the organization.

Furthermore, life assurance service consists of the various policies or protections offered by a life assurance company such service rendered by life assurance company consist of the following as listed, in the insurance Act, 2003:

1.       Term-life assurance

2.       Whole-life assurance

3.       Endowment assurance

4.       Money back plan

5.       Family income benefit

6.       Credit life assurance

7.       Key man assurance

8.       Unit-linked insurance policy

9.       Children policies

10.     Partnership assurance

11.     Joint-life assurance

The experience which some people who have been dealing with insurance over the years has not been very cordial. Such unfavourable relationship has been publicized over the years, that it has created a poor perception of life assurance service and the life assurance companies have not help issues by the reticent in publishing their activities. One has to be aware of life assurance before one can make a conscious effort in purchasing it’s product. The insurance industry has the duty to create awareness of the product and their industry in the mind of the public. The inability of some individual life assurance companies to let the public know that their products or policies exist and what function they perform, in rural areas in Nigeria has culminated a major problem in marketing of life assurance policies in rural areas like Ogoni, Etche, and Rumulomeni.

1.2     STATEMENT OF PROBLEMS

Inspite of the fact that life assurance plays a beneficial role to the survival of businesses in Nigeria and elimination of poverty in the society entirely, yet there is low patronage of life assurance polices in the rural areas in Nigeria. Research has shown that 85% of the people in urban areas in Nigeria  respond to the purchase of life assurance policies while 15% of the people in rural areas do not respond. This is so because of the various factors responsible for the low patronage of life assurance policies in rural areas.

The Nigeria insurance year book (1989) reports that one of the interesting development in urban areas in Nigeria, i*-s the growing interest and full participation of the insuring pubic and most life assurance companies embarking on life assurance activities. This could be attributed to the understanding of the benefit of life assurance as it serves as a useful device for solving complex social problem, such as compensating victims of industrial accidents (workmen’s compensation insurance) and life assurance plays an active role in the field of finance .Their influence has been greatly felt in the investment and financial market of the world. All the above benefit are not experienced in the rural area where the need for life assurance should be more considering the risk faced by it’s residents like, death to a bread winner caused accident etc.

Based on the above realities, this study is carefully designed to investigate the problem encountered by the life  assurance intermediaries in the marketing of life assurance policies in rural areas in Nigeria and also to proffer solution to the identify problems.     

1.3     PROPOSE OF THE STUDY

This study is aimed at investigating the problems of marketing life assurance policies in rural areas in Nigeria other specific objectives to be accomplished includes: 

1.       To ascertain the benefits of marketing life assurances policies in rural areas in Nigeria

2.       To investigate the problems of marketing life assurance policies in rural area in Nigeria

3.       To proffer solution to the identified problems associated with the marketing of life assurance policies in rural areas in Nigeria.

1.4     RESEARCH QUESTIONS

In order to effectively and carefully carryout this research the following questions were raised.   

1.       What are the benefit of marketing life assurance policies in rural areas in Nigeria?

2.       What are the problems of marketing life assurance policies in rural areas in Nigeria?

3.       What are the likely solution to the identified problems in marketing life assurance policies in rural areas in Nigeria?

1.5     SIGNIFICANCE OF THE STUDY

This study will be of immense value or beneficial to life assurance companies and their intermediaries because it will increase their knowledge of the problems of marketing life assurance policies in rural areas and aid them in adopting strategies to overcome the identified problem and will also help students for further research or in their academic furtherance.

It is believed that this study will go a long way in educating the people in rural area in Nigeria, and enlighten them on the benefits of purchasing life assurance policies. It ensures that the financial growth of life assurance companies are met.

Moreover, this study will go a long or will reveal the importance of life assurance to the entire society both urban cities and rural areas. Having mentioned the beneficial role played by life assurance companies in the survival of business and individual within the society. It is as difficult like and uphill task for one to live without life assurance because man by nature is exposed to different kinds of risk which it’s occurrences, are very fortuitous in nature. They are other areas where this study will be useful such as brokerage firms, financial institutions and universities and colleges where life assurance is been studied.          

1.6     SCOPES OF THE STUDY

The scopes of the study is to investigate into the problems of marketing life assurance policies in rural areas in Nigeria like Ogoni, Etche, and Rumulomeni. It is delimited to term life assurance and whole life assurance policies. 

1.7     DEFINITION OF TERMS

1.       LIFE ASSURANCE: Is a contract between the policy holder and the assurer, where the assurer agrees to pay a sum of money (benefit) upon the occurrence of the assured’s death or other events such as terminal illness or critical illness in return of the payment of a stipulated amount called premium at regular interval or in lump sum by the assured.

2.       MARKETING: Are activities of a company associated with buying and selling a product or services it includes adverting selling and delivering product to people.

3.       RURAL AREAS: This refer to as an areas outside of cities and towns. It is non-urban areas that is pertaining to less populated.

4.       PROBLEM: This refers to as difficulty or inferences in the existence of a particular thing or it’s progress.

5.       RESEARCH: This refers to as a careful study of a specified subject matter with the intention of discovering new facts and information about it.

6.       COMPANY: This refers to as business organizations that make money by producing and selling goods and services.

7.       ASSURED: The person whose life is the object of the insurance policy.