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DateLine Sunday, 8 April 2007

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Need to educate people on value of insurance stressed

The insurance policy lapse rates in Sri Lanka are as high as 40% in the first year since people are not educated on the value of insurance.

At present the need for insurance is not considered important by customers. Also our financial literacy is low. Therefore it is the duty of the insurance company to educate the customers on insurance and what benefits the customers can gain by investing on insurance.

We at Sri Lanka Insurance want to create an awareness about insurance and the value of it as traditionally insurance is sold and not bought, said Senior Category Manager Sri Lanka Insurance Aminda Udithathilake.

He said that Sri Lanka Insurance wanted to reposition the product as a long term savings cum investment tool. He said that insurance is a wise investment if it is done wisely as it gives protection and returns.

When a person considers to purchase a policy he should consider the stability of the company, whether they are paying a bonus and on what basis.

Another factor to be taken into consideration is the asset base of the company. Even if you don't experience an unforeseen event you need to be certain you will get the promised returns at the end of the time agreed between the policyholder and the company and in this regard Sri Lanka Insurance ensures it.

He said that Sri Lanka Insurance is secure as a bank with the largest asset base of Rs. 50 billion and the only insurance company in Sri Lanka to be rated AA - (Sri) by an independent global rating agency, Fitch Ratings, UK for financial strength and stability.

Every insurance company maintains a life fund and 90% of the surplus funds of the life fund are distributed among the policyholders while the balance is distributed among the shareholders. This is a statutory requirement.

The Life Fund of Sri Lanka Insurance is Rs. 32 billion and it is three times bigger than our closest competitor. The older and more successful an insurance company is, the bigger the life fund is, so it guarantees customer returns by way of bonuses.

Sri Lanka Insurance for the last 45 years has been paying a bonus and we will continue to do so in the future while the bonus is increasing yearly. Every life policyholder is entitled to a bonus from the first year.

 

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