Why young people should start saving early for retirement

The biggest lie many 20-something year olds keep telling themselves is “it’s too early to save for retirement”. However, the earlier you start the more money you will have when you eventually decide to stop working. Do you want to enjoy the same level of comfort that you were used to, if not better when you eventually stop working?
Here’s why you need to save now for retirement:

1. Compound Interest Is Your Friend
Tiny contributions made at an early age will over the years multiply because of “The power of compound interest”. Therefore, the sooner you start saving and investing, the earlier you take advantage of compound interest; making it easier to achieve that financial goal.
For example with our Jubilee Insurance Personal Pension plan if you are 20 years old and contribute Sh 2,000 for 20 years, you will have Sh 1, 261,973 by the time you are 40 years old. If you decide to contribute the same amount but for 30 years, you will have Sh 3, 087,072 by the time you retire at the age of 50.

2. You will pay less tax
The Government, which most of us feel takes too much from us, actually gives tax breaks to all who contribute to retirement schemes. You can get as high as Sh.20, 000 as a relief before your salary is assessed for tax! For example, an individual earning Sh 50, 000 and making a monthly contribution of Sh.5000 will be taxed on Sh 45,000.

3. You get “free” money from your employer
Many employers contribute to their employees’ retirement accounts. When you choose not to contribute towards your retirement, you are quite literally saying “NO!” to money that the employer is freely giving to you.

4. You have a wider choice of investment options!
A longer time to invest means that you can take greater risks with the investment instruments that you select. This is because you have more time to bounce back for greater gains in case things head south.
Those who start late usually have little wiggle room and tend to stick with the generally safer and more restricted investment vehicles.

5. You can have guarantees on the returns on your savings
A number of retirement plans give absolute guarantees on minimum rates of return. So when it comes down to the money, you can never, on retirement, have a total fund that is less than your total contributions.

6. You are still the master of your budget
It is easier to quickly make retirement savings a permanent item on your budget without having to struggle with so many other expenses.
An early budget provision for retirement savings will quite literally get you off the “not enough therefore no savings” mind set.

7. You will be free to do as you please… for the rest of your life
Many of us aspire to spend the years after retirement travelling the world or living in that Villa. No one dreams of a “broke” future.
With an early saving and investment strategy, starting now, Your Dreams are valid!! You can start living it up and “retire” as early when you are ready. How’s that for a reason!

Jebet Cheruiyot is a Pensions manager at Jubilee Insurance.

Why You Are Not Losing Weight

Have you been struggling with your weight? Does it seem that you’re not becoming any smaller despite following a diet? It may be because you’re following a FAD diet. FAD diets promise quick weight loss hence a lot of people turn to them. Dieting is always the first line of defense against weight gain and the biggest reason behind unconventional methods to hasten the weight loss process. Problem with FAD diets is that they are not sustainable. The kind of plans given are usually very restrictive with few foods or an unusual combination of foods for a short period of time. Research has shown that dieting rarely leads to long-term weight loss success. 98 percent of people who lose weight on a diet gain it back within five years, 90 percent of people who lose weight gain back more weight than they originally lost, only 5 to 10 percent of dieters maintain weight loss that’s greater than 10 percent of their initial weight.

Problem with FAD diets is that they are not sustainable. The kind of plans given are usually very restrictive with few foods or an unusual combination of foods for a short period of time.

These diets put you at risk of nutrition deficiencies and compromise your muscle and hair due protein catabolism. They also cause metabolic problems because they push you into a state known as the “starvation mode” a state in which your body responds to prolonged periods of energy intake by burning supply of carbohydrate glycogen, fat and muscle stores, when this happens your body responds by slowing down your metabolism in order to preserve the little you have left and also holds on to the little food you eat making weight loss at this point even more difficult. Eventually individuals may experience nausea, light-headedness, dizziness and hunger which lead to irritability, fatigue, feeling lethargic and moody because the body and mind are being deprived of essential nutrients they need to be sharp and energetic.

If you’re overweight slimming down is critical for your overall health, but it is important to lose weight safely, a weight loss of ½ kg to 1 kg per week is recommended and the best way to do so is exercising regularly and consulting a licensed dietitian to guide you through the process.

Tech Marvels that will set Insurance Tone

The insurance industry has recorded minimal growth as far as penetration and performance go. The growth has been slower in the developing markets where penetration has seen a sluggish appetite.

The most sensible reason for this has been lack of trust between the customers and the insurance companies for starters and lack of adequate disposable income among the populace in many of these markets.

The last decade has, however, seen a surge in insurance trends, thanks to the advancement in technology. Industry experts say that in years to come, growth of the industry will primarily be fuelled more by technology than by any other factor.

While the changes and growth are not expected to be instantaneous, the winds of change are already sweeping through the industry, propelled by technology and innovation.

Companies that respond and adapt to this inevitable change stand to reap big while those that adopt a wait-and-see approach will cheer on the first movers.

There are some technological innovations that are expected to disrupt the industry and how this technology can be leveraged by insurance companies to make meaningful impact.

Artificial intelligence (AI): AI is an umbrella term used to refer to four different classes of Artificial Intelligence namely Cognitive, Data Science, Computing and Machine Learning.

AI is expected to play a fundamental role in helping underwriters to unlock their potential in terms of value addition to their back and front office operations.

Data science and machine learning, for instance, is expected to take centre stage in implementing these processes because they are the most understood and the most used forms of AI.

The advancement in AI and machine learning are already making it possible to leverage unstructured data sets and companies are already making use of this development.

Companies are implementing AI in all their processes ranging from product pricing to consumer trends prediction.

They are expected to make use of information such as credit histories and online usage trends of clients to come up with algorithms that would customize products for customers.

Blockchain and Chatbots: Blockchain technology is closely related to AI and machine learning. Insurance distribution channels, especially those directly related to micro-insurance products are expected to be modified and re-engineered to adapt to the changing and emerging trends in technology.

More and more companies have already adopted the USSD approach which is considered a low-touch approach in terms of consumer connectivity.

While it has worked very well for most firms, the jury is still out on the viability of this channel as an ideal distribution channel especially in a market where trust in the industry is still an issue to be discussed.

Peer-To-Peer: P2P insurance describes products such as rotating savings and credit associations that normally group people into pools and then offer insurance.

While this is not necessarily a new concept, we expect to see companies leveraging on technologies such as social media and taking advantage of smartphone penetration to create new group structures.

On-Demand Insurance (ODI): The current crop of consumers has varying consumer needs that insurers will have to adapt to.

For instance, the new generation of consumers would prefer to buy items several times in small quantities as opposed to bulk buying. This trend is mostly informed by the irregular income streams that intertwine with competing needs.

 

The solution? “Sachet marketing”. Insurers will be compelled to come up with short-term products that require periodic or regular payment either weekly, daily or monthly.

This means that insures will sell their products on-demand and will either turn a policy on or off depending on the consumer needs.

As the smartphone penetration index continues to rise, we expect that more and more firms will get innovative and introduce diverse micro insurance products for low-income consumers.

The future of insurance growth and penetration will be anchored in technology and its usefulness will depend on how well the players leverage this tool to suit their needs.

The first movers in each and every step of the way will be the bakers of the cake while the rest will only benefit from their generosity.

Elias Kokonya is Business Analyst, Jubilee Insurance.

Great Customer Experience Is One Way To Attract Millennials to Insurance

If you’re like me, you go to the website and social media pages of potential companies that you want to get services from to have a feel of how they interact with their clients; if they answer online queries in good time and to find out what their clients are saying about them. I scrutinize the page to see if they’re more complaints than compliments and that tells me something about your customer service. What I find can either persuade or dissuade me from seeking out the company’s services.

A sure way to increase the uptake of insurance among millennials is by giving a great customer service experience. Customer behaviors and trends have changed. Millennials don’t want to fill forms or be put on hold. They want quick, easy and personalized services when placing inquiries, be it via a call center, social media or one on one interactions with the sales agents. When the customers approach a company for inquiries, they expect prompt feedback – and when done online, the waiting period is even shorter.

Social media is an integral part of our lives today. If insurance companies want to attract millennials to take up more insurance policies, beyond motor insurance, which is a requirement by law, then they need to employ strategic customer service experiences to capture this group.

For this group, instant feedback is a necessity. Jubilee Insurance last month integrated Artificial Intelligence into the online user experience through the launch of their chat bot Julie – the Jubilee Insurance Live Intelligent Expert. Julie assists clients who interact with the company’s Facebook Page and website, to receive real-time services that include end-to-end purchase of insurance products without any human intervention. She’s the first point of contact when you inbox the company page and she gives you accurate and prompt responses.

When an inquiry is more specific, she’s intelligent enough to transfer you to a customer care representative who will take over and help you sort out your query. Her launch was all the buzz through the hashtag #MeetJulie. Julie has a persona, is intelligent, witty, funny and caring. She understands that people are emotional beings and they expect customer service to be authentic and humane and she has developed unique approaches when dealing with different emotions across customer segments.

Millennials use social media to conduct business, make online purchases which go hand in hand with texting or chatting with the customer representative online until the service is rendered or product is delivered. So if they are not satisfied with the level of customer care rendered, they will all together avoid you or become disgruntled.

A disgruntled customer could cost you reputational damage before they exit the relationship – they call your help lines, flood you with messages, and potentially cause negative publicity on your social media pages. On the other hand, if a customer is happy with the level of service received or products purchased, they become your promoters and these are the types of customers insurance companies should nurture. People who tell people about how much they love your company and how great your insurance company’s customer care team is. Promoters happily recommend you to family, friends, and colleagues and even complete strangers through their personal networks.

Insurance companies just like banks are in the business of trust and should commit themselves to offer excellent customer experience and earn the trust of the customer. That is how they can capture the millennials to take up insurance products that resonate with their needs.

When we get this right, they are less likely to defect (even when there have been serious issues) and are more willing to provide constructive feedback that could help you to improve your business and directly contribute to increased revenues or decreased costs.

Cynthia Kimola, is a Corporate Communications Officer at Jubilee Insurance.

How to Effectively Combat Healthcare Fraud in Our Country

Insurance fraud has been known to affect the entire insurance value chain and is now one of the top growing concerns amongst insurers in Kenya.

Although fraud affects all business lines in the insurance sector, it has been increasingly prevalent in the medical class of business and it has been perpetrated in various ways.

Collusion between the policy holders and health service providers, inflated bills from hospitals and clinics, hospitals making patients take unnecessary tests, impersonation or dual membership by policy holders and pharmacy related fraud cases are some of the ways the perpetrators are executing fraudulent activities in the industry.

Some health service providers have been known to apply two tier pricing for their services. This usually happens when a patient who presents their medical card is charged more than a patient who pays in cash for the same service.

The effect of this has been the exhaustion of medical cover benefits before the duration, leaving the insured customer exposed for the remaining period of cover.

In some cases, patients are subjected to unnecessary tests that have nothing to do with the treatment of what they are ailing from so that the health provider can bill the insurer.

The unsuspecting patient undergoes a number of tests and since the patient trusts the doctor, and they don’t have to pay out of pocket, they comply without questioning.

Patients who pay for cash are usually more alert and often ask why the tests need to be done. And in such cases, you find some doctors will order only the specific test.

We also have fraud committed by the insured who allows another individual to access medical services using their credentials.

They collude with the doctor and permit someone else other than the insured to use their medical card in the health facility and for billing at a pharmacy for someone else’s prescription.

Identity theft is also becoming common where the health facility uses the identity of an insured patient and bills for services that were not rendered to them using that patient’s information.

What then is the way forward? At Jubilee Insurance we continue to strengthen and tighten our operations by automating our processes and systems that link a specific patient to the claim they have made.

Technology will enable us to monitor and track where services were rendered, how long it took, what was the cost amongst other details and this will make it harder for fraudsters to falsify claims.

We will also monitor the quality of service our customers receive where we have a 360 degree view of the entire process, from when you arrive at the health facility and run your medical card, and the subsequent processes.

This will enable us to give feedback to our providers on their processes to ensure our customers enjoy efficient and seamless services whenever they visit these facilities.

Whether you are covered under a corporate insurance scheme or an individual insurance policy, fraud eventually translates into higher costs, either in premiums at renewal and/or you end up paying for your bills when you exhaust your cover before time.

Our goal is to increase insurance penetration in Kenya from the current 2.7 per cent by making insurance services more affordable and accessible to Kenyans.

Patrick Tumbo, is the CEO, Jubilee Insurance, Kenya.