COLLEGE OF BUSINESS AND MANAGEMENT SCIENCES

School of Business

Assessment of the Factors Affecting the Uptake of the Life

Insurance Policy in Uganda: A Case Study of SANLAM
Insurance Ltd, Uganda

BY

Mugisha Pascal
BBA (Accounting) (Mak)

2017/HD06/2694U

A dissertation Submitted to the Directorate of Research and Graduate

Training in Partial Fulfillment of the Requirements for the Award of
Master of Business Administration of Makerere University

November, 2019
 DECLARATION

This research dissertation is my original work and has not been presented before for any
academic qualification/award in any other University. The quotations I have used have been fully
acknowledged by means of complete referencing.

…………………………. ............………………

Signature Date
Mugisha Pascal
2017/HD06/2694U
Makerere University

Supervisor

…………………………. ……….........…………….

Signature Date
Dr. Samuel Eyamu

College of Business and Management Science

Makerere University

i
 DEDICATION
This report is dedicated to my family and friends for their love, support, encouragement,and for
their positive contribution towards my education. To my wife Samali, you have supported me
dearly on this academic journey, thank you.

ii
 ACKNOWLEDGEMENT

First and foremost I would like to thank God, the almighty for the far I have come and for giving

me good health, strength, energy and understanding to bear with intended frustrations.

To my supervisor, Dr. Samuel Eyamu I would like to extend my sincere gratitude for your

invaluable pieces of advice, academic support, guidance and incomparable patience at various

stages of the proposal, thesis preparation and writing that shaped the outlook of this thesis. Your

insights guided my thinking and understanding of this work. Your patience in every situation that

came up to drag the pace of this study was Godly inspired. You relentlessly provided unwavering

inspirational, moral, professional support and encouragement when sometimes things seemed

unbearable. I will forever be indebted to you. May the good Lord bless you!

To my family members, I sincerely wish to thank all of you for your support during my study. To

Galen Welsch without whom this research would not be possible, you financed my MBA

program. You are all my support system.

To my friends and course mates, thank you for finding time to share a word of encouragement

and humor that energized me to forge on, you’resuch a blessing. I would also like to

acknowledge the support, guidance and encouragement of various people like Mrs. Samali

Kahunde Mugisha, Eng. Martin Tumutungire, Mr. Naktare W. Peter, and all respondents who

accepted to be interviewed and for sparing time out of their busy schedules to respond to these

research instruments which enabled me to come out with this thesis, my sincere thanks to all of

you for making it possible, for me to complete my study. Be blessed abundantly.

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 TABLE OF CONTENTS
DECLARATION ........................................................................................................................................... i
DEDICATION .............................................................................................................................................. ii
ACKNOWLEDGEMENT ........................................................................................................................... iii
TABLE OF CONTENTS ............................................................................................................................. iv
LIST OF TABLES ...................................................................................................................................... vii
LIST OF FIGURES ................................................................................................................................... viii
LIST OF ACRONYMS ............................................................................................................................... ix
ABSTRACT.................................................................................................................................................. x

CHAPTER ONE: INTRODUCTION ....................................................................................................... 1

1.1 Background to the Study ..................................................................................................................... 1

1.3 Problem statement ............................................................................................................................... 4
1.3 Objectives of the study........................................................................................................................ 4
1.4 Research questions .............................................................................................................................. 5
1.5 Study scope ......................................................................................................................................... 5
1.6 Justification of the study and the choice of Sanlam insurance company ............................................ 5
1.7 Conceptual framework ........................................................................................................................ 6
1.8 Significance of the Study .................................................................................................................... 7
1.9 Definition of key operational terms .................................................................................................... 8

CHAPTER TWO: LITERATURE REVIEW .......................................................................................... 8

2.1 Introduction ......................................................................................................................................... 9

2.2 Insurance and Life Insurance .............................................................................................................. 9
2.2.1 Historical development of the insurance industry in Uganda ........................................................ 10
2.2.2 Key players in the insurance industry ............................................................................................ 11
2.2.3 Performance of Uganda’s insurance industry ................................................................................ 11
2.3 Uptake of Life Insurance .................................................................................................................. 11
2.3.1 Attributes of consumer attitudes that affect the uptake of life insurance ....................................... 13
2.3.2 Effects of affective or emotional attitudes on life insurance uptake .............................................. 14
2.3.3 Effects of cognitive or evaluative attitudes on life insurance uptake ............................................. 15
2.3.4 Effects of behavioral or conative attitudes on life insurance uptake.............................................. 16
2.4 Socio-economic factors that influence the uptake of life insurance covers. ..................................... 17
2.4.1 Income............................................................................................................................................ 17

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 2.4.2 Poverty ........................................................................................................................................... 17
2.4.3 Age ................................................................................................................................................. 18
2.4.4 Education attainment ..................................................................................................................... 18
2.4.5 Marital status.................................................................................................................................. 18
2.4.6 Occupation ..................................................................................................................................... 18

CHAPTER THREE: METHODOLOGY ............................................................................................... 20

3.1 Introduction ....................................................................................................................................... 20

3.2 Research design ................................................................................................................................ 20
3.3 Study area and target population....................................................................................................... 20
3.4 Sampling techniques ......................................................................................................................... 21
3.5 Sample size ....................................................................................................................................... 21
3.6 Data collection .................................................................................................................................. 22
3.6.1 Data Collection methods ................................................................................................................ 22
3.6.2 Research instruments ..................................................................................................................... 22
3.7 Data management.............................................................................................................................. 22
3.8 Data analysis ..................................................................................................................................... 23
3.9 Data Presentation and Analysis......................................................................................................... 23
3.10 Ethical consideration ....................................................................................................................... 23
3.11 Study limitations and how they were addressed ............................................................................. 24

CHAPTER FOUR: RESULTS AND DISCUSSION OF THE FINDINGS ......................................... 25

4.0 Introduction ....................................................................................................................................... 25

4.1. Background characteristics of respondents ...................................................................................... 25
4.1.1 Gender of the Respondents ........................................................................................................ 26
4.1.2 Age of the Respondents ............................................................................................................. 26
4.1.3 Education level of the Respondents ........................................................................................... 27
4.1.4 Marital status of the respondents................................................................................................ 28
4.1.5 Occupation ................................................................................................................................. 28
4. 2 Presentation of the study findings according to research objectives ................................................ 29
4.2.1 The degree of life insurance uptake in terms of demographic structures in Uganda ................. 30
4.2.1.1 Possession of insurance policy ............................................................................................ 30

4.2.1.2 Possession of insurance policy according to gender ........................................................... 31

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 4.2.1.3 Possession of insurance policy according to age ................................................................ 31

4.2.1.4 Possession of insurance policy according to education attainment..................................... 32

4.2.1.5 Possession of insurance policy according to marital status................................................. 33

4.2.1.6 Possession of insurance policy according to occupation. ................................................... 33

4.2.1.7 Reasons why participants bought or wish to buy life insurance ......................................... 34

4.2.1.8 Reasons why participants never bought or don’t not wish to buy life insurance ................ 36

4.3 The extent to which consumer attitudes affects the uptake of life insurance .................................... 38
4.4 The extent to which socio-economic factors limiting the uptake of life insurance cover in Uganda 40
4.5 Discussion of the findings ................................................................................................................. 42

CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS ................................................. 46

5.1 Introduction ....................................................................................................................................... 46

5.2 Conclusion of the findings ................................................................................................................ 48
5.3 Recommendations ............................................................................................................................. 48

REFERENCES .......................................................................................................................................... 50

APPENDICES ........................................................................................................................................... 53

Appendix I: Key Informant Interviews (KII) guiding questions. ........................................................... 53

Appendix II: Questionnaire.................................................................................................................... 54

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 LIST OF TABLES
Table 1. 1: Life insurance premium volume in USD in 2016 ....................................................................... 2

Table 3. 1: Sample structure ....................................................................................................................... 22

Table 4. 1: Gender of respondents .............................................................................................................. 26

Table 4. 2: Age of respondents ................................................................................................................... 26

Table 4. 3: Education background of respondents ...................................................................................... 27

Table 4. 4: Occupation ................................................................................................................................ 29

Table 4. 5: Interpretation of the mean score on Likert scale items ............................................................. 30

Table 4. 6: Possession of insurance policy according to gender ................................................................. 31

Table 4. 7: Possession of insurance policy according to education attainment .......................................... 32

Table 4. 8: Possession of insurance policy according to marital status ...................................................... 33

Table 4. 9: Possession of insurance policy according to occupation .......................................................... 33

Table 4. 10: Reasons for buying or wishing to buy life insurance .............................................................. 34

Table 4. 11: Reasons for not buying or not wishing to buy life insurance.................................................. 36

Table 4. 12: Extent to which consumer attitudes affects the uptake of life insurance ................................ 38

Table 4. 13: Extent to which socio-economic factors affect uptake of life insurance cover in Uganda ..... 40

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 LIST OF FIGURES
Figure 1. 1: Conceptual Framework ............................................................................................... 6

Figure 4. 1: Marital status .......................................................................................................................... 28

Figure 4. 2: Possession of insurance policy according to age ..................................................................... 32

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 LIST OF ACRONYMS
AIO : African Insurance Organization

GDP : Gross Domestic Product

IRA : Insurance Regulatory Authority

KI : Key Informants

SPSS : Statistical Package for Social Sciences

TPB : Theory of planned behavior

UBOS : Uganda Bureau of Statistics

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 ABSTRACT

Life insurance is contract in which one party (the insurer), in consideration of a specified amount
(premium), either in lump sum or in form of any other periodical payments, in return agrees to
pay to another party (the assured), or to the person for whose benefit the policy is taken, a stated
sum of money upon occurrence of a tragedy. Besides its importance, life insurance penetration
and uptake in Uganda is less than 1%. The low penetration rate and uptake of life insurance has
however been cited to be caused by a number of factors. So the current study sought to assess
factors affecting uptake of the life insurance policy in Uganda, focusing on Sanlam insurance as
a case study. The study specifically ascertained the degree of life insurance uptake in terms of
demographic structures, examined the extent to which consumer attitudes affects the uptake of
life insurance and assessed socio-economic factors limiting the uptake of life insurance cover in
Uganda. A cross-sectional design with qualitative and quantitative methods was used in
collecting data from 155 respondents.

The study revealed that life insurance in Uganda is low because many people are hindered by a
number of factors ranging from socio-demographic factors, attitudes and socio-economic factors
particularly the financial constraints. Socio-demographic factors such as age, gender, education,
occupation and marital status greatly affects uptake of the policy. The uptake is also influenced
by consumer attitudes for instance, many do not trust life insurance providers, many fear to lose
money in premium in case they do not become sick since most medical premiums cannot be
refunded unless a strategy occurs. It was also found that there are high levels of ignorance about
the benefits of life insurance among many Ugandans. There are also high levels of financial
illiteracy among the low income earners; therefore marketers of life insurance services targeting
these groups are often confronted with the challenge of convincing them to embrace life
insurance and its associated benefits. Besides this, socio-economic factors such as affordability
of life insurance, difference in occupation, difference in income levels; difference in family size
for instance dependence level by other people, difference in social security savings among others
are greatly affects the uptake of life insurance in Uganda. The study therefore confirmed that low
uptake of life insurance and its products is partially due to low awareness and affordability which
has caused a lot of ignorance about the policy, hence the study recommends for vigorous
sensitizations of the public. The government of Uganda also needs to intervene for reduction of
life insurance premiums so as they can be affordable to all classes.

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 CHAPTER ONE
INTRODUCTION
1.1 Background to the Study

Life insurance as part of the insurance business plays a crucial role in human life and the
economy of a country by providing financial security to beneficiaries upon occurrence of
unforeseen events such as death, disability and accidents. Thoyts (2010), defines, life insurance
as a contract in which one party (the insurer), in consideration of a specified amount (premium),
either in lump sum or in form of any other periodical payments, in return agrees to pay to another
party (the assured), or to the person for whose benefit the policy is taken, a stated sum of money
on the happening of a particular specified event. Hence, life insurance items enhance long-term
savings and the re-investment in private and public sector projects, thus reducing anxieties within
the society and creating employment opportunities to the members of the society. The business
of life insurance has been receiving attention in recent years as a critical driving force of
economic growth in both developed and developing countries (Laurent and Kivyiro, 2012).

Life insurance is a key sector whose contribution to the development of any economy cannot be
over-emphasized. For instance, apart from giving security to the insured against health
uncertainties, life insurance also mobilizes domestic savings, inculcates the culture of thrift, and
helps to increase income and create wealth. Life insurance comes along with benefits like;
protecting the money of the insured or beneficiary in case of death before maturity, it reduces
depression tendencies that come with uncertainty and brings peace to the insured as they can see
the future. Life insurance is also a social measure of security creating a status for the holder, it
provides for holder’s retirement saving. It also can as well act as an investment for the holder,
asides protection and safety for the holder’s money it also does for the holder of the policy
themselves and raises rate of capital formation and directly impacts on economic development.
Despite all the importance attached to life insurance, it is however unfortunate that the level of
its consumption and penetration especially in developing countries with Uganda inclusive is still
very low. For instance, in Uganda the figures show that insurance contribution to Uganda's
economy was estimated 0.81 per cent to the GDP for 2017 compared to 0.73 per cent in 2016
and 0.76 per cent in 2015 (IRA, 2019). However, these figures are much lower when comparing
with insurance adoption in the past years. For instance, in 2012, insurance contribution to GDP

1
was 0.94% and in 2013 it was 1.05% of the GDP El Monayery (2013). Despite the decreasing
rate of insurance uptake, these figures are also considered to be very low as compared to other
countries in Africa such as South Africa which had a penetration of 7.58% of the GDP in 2009
and 12% of the GDP in 2010. Uganda also lags behind among the East African’s countries like
Kenya whose life insurance penetration was 1.06% and that of Rwanda and Burundi were 0.6%
and 0.5% respectively in 2013 (El Monayery, 2013). Life insurance in all these counties has
dramatically been increasing up to date according to the African Insurance Organization (AIO),
2019 report.

The global sales for unit-linked products in particular declined significantly as customers became
more skeptical after the sharp falls in the global equity markets and their inability to show a
sustainable recovery outlook. However, sales for basic life insurance products with guarantees
rebounded in 2010, contributing to the recovery in life insurance premiums. Since 2009, the
global life insurance industry seems to have recovered from the crisis, with regions like North
America and Japan commanding representation of more than 21% and 14% of global premiums
respectively (Rejda et al, 2017). Below is a table showing recent statistics of life insurance
penetration rankings in developed countries.

Table 1.1 Global statistics for life insurance premium volume in USD in 2016
Table 1.1 shows recent statistics of life insurance penetration rankings.

Table 1.1: Life insurance premium volume in USD in 2016

Premium volume Change in % nominal Share of the world

(US$) 2016 (US$) market (in %)
Ranking Economy
1 USA 558,847 0.7 21.35
2 Japan 354053 3.9 13.53
3 China 262616 24.6 10.03
4 UK 199369 -8.7 7.62
5 France 152817 -0.9 5.84
6 Italy 122438 -4.0 4.68
7 South Korea 104169 2.8 3.98
8 Germany 94661 -1.8 3.62
9 Taiwan 84493 6.1 3.23
10 India 61817 10.3 2.36
11 Hong Kong 51940 25.9 1.98
Source: Rejda (2017)

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However, developing countries continued to experience low penetration of life insurance. This
low penetration signifies that the growth of the life insurance industry depends on the overall
economic growth (Gerber, 2013). Despite the above, according to the AIO, the low uptake of life
insurance which brings in low penetration especially in developing countries has been linked to
different factors, of which among others these include socio-economic perspectives, whereby
factors affecting policy holder attributes such as behavior towards the cover, demographic
influences among others, are the major limiting factors. Many different psychological models
within different disciplines have been proposed to explain the influence of socio-economic
factors towards consumption of insurance covers in terms of consumer’s attitudes, premium
rates, motivation towards consumption of insurance among others (SwissRe, 2016).

In the perspective of peoples’ behavioral tendencies, several psychological models within

different disciplines have been proposed to explain consumer’s attitudes, motivation and
consumption especially with regard to products like insurance. The most popular theoretical
models applied in products and service consumption studies are the Theory of Reason Action
(TRA) and the Theory of Planned Behavior (TPB), Behavioral Perspective Models (BPM) and
Classical Attitude-Behavior Model (CABM). The main advantage of these models is the
inclusion of an all person, product and related situation factors in explaining variations of
insurance consumption frequency (Wireko, 2015). Above theories, claims that it is very difficult
for many people especially those that are poorto think about purchasing insurance covers when
they have tasks of providing other priorities/basic needs like food, shelter, clothing and basic
education to their immediate dependents. All these are cognitive component referring to the
person’s thoughts, affective component referring to person’s feelings, and the conative
component referring to the person’s behavioral tendencies.

In Uganda, despite the efforts by the IRA and its partners to improve the uptake of life
insurance, its penetration is still critically low. Sanlam Life Insurance Uganda Ltd in particular
which is one of the subsidiaries of Sanlam Emerging Markets (SEM) and part of the Sanlam
group which is responsible for the strategic focus of growing Sanlam’s presence in Africa and
South East Asia, has tried to revive the life insurance usage in Uganda but much still needs to
be done as the services have not yet been embraced fully as the way it is with general insurance
covers. Sanlam was the first insurance company in Uganda to introduce group life assurance

3
and it has been in operation in Uganda since June 2010 providing Life Insurance to individual
and group life products as well as medical insurance. Despite Sanlam now having about 80
agent offices country wide, nothing much has been changed in terms of uptake of life
insurance, hence it is from this background that this study is being carried out to find out the
factors that are contributing to this low uptake of life insurance in the country.

1.3 Problem statement

The importance of the life insurance policy for employees cannot be overstated. Research shows
that organisations that offer life insurance policies to employees are perceived favorably. This is
because life insurance is a social security to the insured against health uncertainties hence
reducing depression tendencies that come with uncertainty and bring peace to the insured as they
can see the future, mobilize savings for holders retirement benefits, inculcates the culture of thrift
which helps to increase income and create wealth. Yet in spite of all these, many organisations in
Uganda haven’t adopted it. In fact, anecdotal evidence shows that many organisations rarely
provide life insurance policies. Failure to adopt life insurance has led to poor health status among
the old aged people not only in Uganda but across the world (Orem and Zikusooka, 2010). This
is due to rampant poverty that is associated with the old age. Insurance companies like Sanlam
have been on the forefront in the promotion of life insurance uptake in the country now close to
10 years. However, there seems to be a slow up take of the policy compared to other policies
according to the IRA (2019) report. The reason for the slow uptake is not ascertained but Sanlam
assumes its economic status, knowledge, motivation, package bonuses, ignorance, and priority
setting among other factors. There is however no certainty that those factors do indeed affect the
uptake of the policies unless further investigation is undertaken. Besides this, there is scanty
literature on this topic and there seems to be a knowledge gap especially regarding the factors.
As such, this study attempted to answer the following questions: what is the level of life
insurance policy uptake in Uganda? Understanding such a question helped to establish the extent
to which the life insurance policy has been adopted as well as in recommending strategies for
increased adoption.
1.3 Objectives of the study
The study aims at assessing the factors that influence the uptake of life insurance in Uganda.
To realize this purpose, the study specifically intends to;

4
 1. To ascertain the degree of life insurance uptake in terms of socio-
demographic structures.
2. To examine the attributes of consumer attitudes that affects the uptake of
life insurance.
3. To access the socio-economic factors limiting the uptake of life insurance
cover in Uganda
1.4 Research questions
1. What is the degree of life insurance uptake in terms of age structure in
Uganda?
2. Does consumer attitude affect the uptake of life insurance?
3. What are the socio-economic factors limiting the uptake ofthe life
insurance cover in Uganda?
1.5 Study scope
The content scope of this study is about the assessment of the factors that influence the uptake of
the life insurance policy in Uganda. The geographical scope of the study was Kampala district
where the respondents were drawn from Sanlam insurance in various branches within Kampala,
where the information about the level of adoption was obtained. The study also drew respondents
from various organisations both formal and informal to find out why they had or had not
purchased life insurance policy for themselves or for their employees. The study focused on the
level of adoption of life insurance policy in Uganda between the 2010 and 2019 as the time
scope of the study. This time period was selected because Sanlam has been in Uganda since their
acquisition of the license to provide Life Insurance business in Uganda on 23rd March 2010 by
the Uganda Insurance Commission (Uganda Insurance Association, 2011)1. Hence this period
gave adequate statistics on the extent of life insurance cover uptake by its clientele.

1.6 Justification of the study and the choice of Sanlam insurance company

Among insurance companies that offer life insurance policy in Uganda, Sanlam insurance
company is one of the companies that have been in operation in the country for close to 10 years.
The company however has realized a slow transient up take of particularly the life insurance

1
http://uia.co.ug/sanlam-life-insurance-u-ltd/

5
policy compared to other policies. The reason for slow uptake is however not yet ascertained but
according to the company’s report, it is assumed that slow uptake of life insurance is associated
with factors like; age, economic status, knowledge, motivation, package bonuses, presence of
other saving schemes like Sacco’s, ignorance, and priority setting. There is however, no certainty
that those factors do indeed affect uptake of the policies as per Sanlam’s claims. Hence this
justifies the choice of Sanlam as the case study to substantiate on the claim about the factors that
hinder the uptake of the life insurance policy.
Furthermore, despite the number of studies that have been carried out on life insurance and its
role towards enhancing people’s livelihoods, many of these studies have failed to point out the
extent to which life insurance policies are affected due to some factors that hinder its uptake and
performance. For instance, a study by Odemba (2013) which investigated the factors affecting
uptake of life insurance in Kenya, asserted that low uptake of life insurance is associated with
poor selling methods, targeting wrong clients and poor company structure. This assertion clearly
indicates that Odemba only focused on the internal factors that affect the selling of insurance
covers and failed to point out the external factors especially the policy holders’ attitudes as well
as the social economic status of clients among others which are also presumed to dearly affect
the adoption of the policy. This and many other studies present a research gap that needs further
investigation.
1.7 Conceptual framework
Figure 1 below is a conceptual frame work. It shows the factors (internal and external) that
influence the uptake of life insurance in Uganda.

Level of awareness

 Sensitization on the
importance of life insurance
 Government policies

Factors affecting uptake of life Uptake of life insurance

insurance
 Demographic structures/factors Life covers
 Consumer attitudes
 Socio-economic
Figure factors i.e.
1.1: Conceptual Framework
Income levels
Source: Modified from Kotler, P., & Armstrong, G. (2010). Principles of Marketing 13th edition
Pearson Education, Inc. Upper Saddle River New Jersey USA.ISBN-13, 978-0.

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From Figure 1.1, it can be seen that uptake of life insurance cover can have both, the direct and
indirect influence. Under direct influence, factors like demographic of consumers, their attitudes
as well as socio-economic factors such as income levels are expected to positively influence the
uptake of the covers most especially when premium and others terms are favorable. But also, can
jeopardize the uptake under unfavorable conditions.

However, on the other hand, people may have the potential of purchasing the premiums but
because of the low level of awareness on the insurance products by the insurance companies,
people may not be aware of the importance of such products, hence keeping the uptake low. But
also due to the government policies on insurance like the recent proposal of the health insurance
policy in Uganda, people may be forced to purchase life covers hence increasing the uptake of
life insurance.

1.8 Significance of the Study

This study would be immensely significant in various ways to marketing practitioners, policy
makers and stakeholders.

 To the management of Uganda’s insurance companies, the findings and results of this
study would provide a more reliable scientific measure and perspective for describing and
evaluating the level of factors that hinder life insurance service delivery. It would also
serve as a valuable source of information that would bring to light the switching
intentions of their respective customer.
 This study would also provide empirical support for management’s strategic decisions in
several critical areas of their operations.
 To policy makers like government agencies such as Insurance Regulatory Authority
(IRA), the findings would provide them with valuable insights and a more reliable guide
to monitoring the impact of the operations of Uganda’s Insurance Industry.
 To other stakeholders like investors, shareholders, employees, consumer associations,
among others, the study would provide valuable information that would allow them to
provide useful suggestions to the improvement in life insurance service delivery of their
respective insurance companies in Uganda.

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  This study would add on to the existing literature about factors affecting the uptake of life
insurance in Uganda and beyond.
 Future researchers could be able to use this study as a reference material if they are
intended to carry out their studies in the same field.
 The findings of this study could also be useful to the different stake holders i.e. those
ones contributing their funds to Sanlam insurance company to understand how the
organization is performing in order to be sure that their funds are safe.
 This could help the public, insurance officers to be in position to know the strategies and
policies adopted by insurance companies that may help them in good governance.
 This study sets the foundation for further studies on the organizations’ performance in
Uganda, not only in insurance companies but in different organizations.
 The Ministry of finance could be in position to recognize the causes and effects of the
poor performance of the life insurance industry. This could also help the ministry to be in
position to initiate strategies and policies that aim at combating this hazard.

1.9 Definition of key operational terms

Insurance service: These provide the user with a means to put aside money in order to receive
financial protection or reimbursement when losses occur.

Life insurance: This is a contract between an insured (insurance policy holder) and an insurer
(insurance company), where the insurer promises to pay a designated beneficiary a sum of
money upon the death of the insured person (IRA, 2011; 2014; 2015a). Depending on the
contract, other events such as terminal illness or critical illness may also trigger payment. The
policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such
as funeral expenses) are also sometimes included in the benefits. While general insurance is
usually for other non-life uncertainties.

Premium- This refers to the money paid for the purchase of insurance services.

Insurance Penetration- This refers to the ratio of total premiums from insurance products to the
GDP of the country. This is often used in measuring the uptake of the insurance services.

8
 CHAPTER TWO
LITERATURE REVIEW

2.1 Introduction

This chapter provides a detailed review of relevant literature on factors affecting the uptake of
life insurance from various scholars across the world. Life Insurance plays an important role in
the lives of many as it acts as a social security to the insured against health uncertainties and it
mobilizes savings for holders’ retirement benefits as it inculcates the culture of thrift which helps
to increase income and create wealth. However, in spite of all these, its level of uptake is still
low especially in Uganda due to a number of factors. This low level of life insurance uptake has
contributed to the increased number of old aged people with poor health (Liebenberg et al,
2012). Various scholars across the world including Sanlam insurance which also operates in
Uganda have documented a number of factors responsible for the low uptake of life insurance.
However, there is variation in their conclusions; hence there is need for further investigations on
the factors that hinder the uptake of this policy.

2.2 Insurance and Life Insurance

Insurance is a contract between the policy owner and the insurer, where the insurer agrees to
pay a sum of money upon the occurrence of the insured individual. Life insurance therefore is a
contract between an insured (insurance policy holder) and an insurer (insurance company),
where the insurer promises to pay a designated beneficiary a sum of money (the "benefits")
upon the death of the insured person.
Depending on the contract, other events such as terminal illness or critical illness may also
trigger payment (Ahmed et al, 2010; 2011). In return, the policy owner agrees to pay a
stipulated amount called a premium at regular intervals or in lump sums. There may be designs
in some countries where bills and death expenses plus catering for after funeral expenses
should be included in the Policy Premium. As with most insurance policies, life insurance is a
contract between the insurer and the policy owner whereby a benefit is paid to the designated
beneficiaries if an insured event occurs which is covered by the policy. The value for the policy
holder is derived, not from an actual claim event, rather it is the value derived from the 'peace
of mind' experienced by the policyholder, due to the negating of adverse financial

9
consequences caused by the death of the life assured (Oscar et al, 2013).

2.2.1 Historical development of the Insurance industry in Uganda

The insurance industry in Uganda dates as far back as the 1950s, mainly composed of foreign
firms then (Asians, British and Americans), handling the insurance requirements relating to the
construction of the Owen falls Dam in Jinja. The economic progress that followed the
completion of the dam through manufacturing and other industries, offered opportunities for the
growth of the insurance business, and life insurance was evidently vibrant at this time up to the
late sixties. Post-independence infrastructural development programmes like the construction of
schools, hospitals and the airport all created opportunities for underwriters to embark on the
development of the general insurance business. By the Nakivubo pronouncement of 1970, all
foreign companies became locally incorporated, there were over 40 companies in the country
plus the National Insurance Corporation that had been established by the act of parliament in
1964, which was a positive government initiative to localize trade. The characteristics of the
industry at the time therefore, signified that the insurance business came to Uganda as a foreign
discipline to address the needs of the British and Asian Community mainly, these dominated the
politics, trade and commerce of the country then, and it lacked appreciation from the indigenous
citizens. However, the 1970s was an era of economic decline in the country. This set a big
challenge in the industry, which was then mainly managed by locals, after the departure of the
British and Asians. The problems of inflation and insecurity further exacerbated the situation,
inhibiting the effective and satisfactory performance of the industry, thus placing the industry in
the universal image painted with ever-living doubts and suspicion from the public(IRA, 2015b).

A positive attribute of this period though, was the emergency of few indigenous companies and
brokers, as part of the capacity building efforts replacing some of the players who had vanished
from active participation in the insurance business. The late 1980s saw an end to political
instability, and the first strides to economic recovery. However, the 1987 currency reform dealt
the last blow to the life insurance industry because the policy values initially eroded by inflation
were further reduced although in effect, the real reduction was about ten times more which
adversely affected life policy holders, leaving a big question in the minds of potential clients.
However, continued efforts to economic recovery as well as political sanity in the country put

10
new life in the growth of the insurance sub-sector and created an enabling environment for the
expansion of insurance services in Uganda (FinScope Survey, 2018).

2.2.2 Key players in the insurance industry

Insurance Companies

These are the key players in the insurance industry in Uganda. Today there are 23 licensed
companies, 13 of which are foreign owned and 10 locally owned companies. They are
specifically licensed to carry out business in Uganda in two classes only. That is Life insurance
and non-life insurance. According to the Insurance Regulatory Authority, January 2015, only 7
companies have been licensed to handle both life insurance and non-life insurance,15 companies
handle non-life insurance and 2 companies handle life insurance only.

Life insurance is a vital aspect of the insurance business that contributes the most valuable funds
because of its long-term nature, but many players are reluctant to underwrite it for reasons like
the HIV/AIDS scourge and historical problems, yet the insuring public also lost trust in it due to
historical facts, and poor knowledge about how it operates(IRA,2018).

2.2.3 Performance of Uganda’s insurance industry

The performance of Uganda's insurance industry has depicted overall growth since 1987.
Performance of some individual insurance companies has shown high growth while others,
mostly indigenous companies have performed so poorly that they not only failed to meet their
liabilities, capital and professional obligations but also quit the business ultimately (IRA, 2015a).
For instance, out of the 28 registered companies in 1995, by March 1999, only 15 had been
licensed to remain in business. Pan World Insurance Company, the second largest by premium
size had her license revoked in May, 1999. The number remained at 17 for the last four years,
since it dropped from 19, in 2000 (IRA, 2015a). To top it up the findings of the FinScope 2018
survey indicate that only 1% of Ugandan adults(220,000 people), have enrolled for insurance
cover by 2018 (Finscope report,2018).

2.3 Uptake of Life Insurance

Uptake of life insurance is the ratio of Gross Direct Premiums to Gross Domestic Product

11
(GDP). This is very low in Uganda. Currently, work is being done by insurance companies in
the area of micro insurance. Life insurance providers can build customer involvement and
loyalty; establish competitive differentiation; and increase referral value by applying various
initiatives, (Business Daily, 21st January, 2013).

Insurers have under-invested in technologies at a time when customer expectations regarding

service and delivery is higher than ever. There are numerous opportunities for insurers to
collect and analyze customer information to improve the range and quality of products offered;
to refine pricing strategies; and to develop an effective array of distribution channels.
Technologies including business intelligence, descriptive and predictive analytics, and data
mining can help life insurers improve both their decisions regarding new products and their
levels of customer service. At the next level, analytics can help life insurers identify customers
who are in danger of making a full or partial switch to another insurer, and can identify
appropriate actions to hedge off such decisions.
The widespread use of social media provides another opportunity for life insurers to increase
their understanding of what customers want. Ultimately, life insurance providers must develop
social media strategies and policies that coordinate brand positioning, product offerings and
distribution channels to capitalize on social media’s power to reach and engage both existing
and prospective customers.
Adoption of loyalty programs is lower in life insurance than other financial industry players.
Players in the retail industry among others have demonstrated that loyalty programs may be a
worthwhile area for life insurance providers to explore in order to improve customer retention.
Life insurers could provide discounts for a customer who buys long-term care, an annuity and a
life insurance policy from the same company.
Life insurers have not perfected their ability to approach the right customer with the right
product offering. For instance, younger customers (say in the 35 to 45 age bracket) are often
interested in single-premium insurance products that build cash value quickly if the principal is
not touched for 10 to 20 years. Other customers may want to purchase only the simplest and
cheapest of term life policies. Older customers with substantial assets may have complex needs
involving estate planning or the provision of long-term care.
Many insurers, lack the customer profiling capabilities necessary to quickly match products
with high-potential customers. Agents and customers both waste time because of the first face-
12
to-face meeting as it is devoted to establishing the customer’s needs, when a simple interactive
“app” designed for a tablet computer or smart phone could ask the same 20 or so questions that
the agent might otherwise ask in the first meeting, which should be devoted to addressing the
customer’s real needs.
Life insurers are highly reliant upon their product development and policy administration
systems, but many of these are unable to support the demands of an aggressive program of
product segmentation, new product development and robust distribution channels. In terms of
systems, few life insurers have in place what they will need to build customer loyalty and grow
sales. They need an integrated architecture that encompasses policy administration and claims,
but that also supports multi-channel distribution through social media monitoring, customer
relationship management, data collection and advanced analytics.

2.3.1 Attributes of consumer attitudes that affect the uptake of life insurance

An attitude is often considered as an evaluative or cognitive process, and a disposition to behave

in certain ways (Odemba, 2013). A broadly accepted definition of attitude is a psychological
tendency that is expressed by evaluating a particular entity with some degree of favor or disfavor
(Kuenyehia, 2014). In this definition, attitude is focused on a particular entity or object, rather
than all objects and situations with which it is related. Hence, an attitude is a predisposition to
like or dislike that entity.

The term “attribute” on the other hand is defined in Webster’s dictionary as “an inherent
characteristic” of an object, and various types of attributes have been explored in this literature:
appearance adjectives (such as color, texture and shape), presence or absence of part and
similarity to known object categories. Attributes have also been broken up into semantic, i.e.,
those that can be described using language and non-semantic but discriminative or similarity-
based (Russakovsky and Fei-Fei, 2010).

According to FishbeinandAjzen (1975), there exists a multi-component view of attitude; all

responses to a stimulus object are mediated by the person’s attitude toward that object. These
responses then are classified into three categories called as the three components of attitude.
Cognitive component refers to perceptual response and verbal statement of belief (person’s
thoughts), affective or emotional component are sympathetic nervous responses and verbal

13
statements of belief (person’s feelings) and behavioral or conative component implies overt
actions and verbal statement concerning behavior (behavioral tendencies).

However, any response can be used to infer a person’s attitude. For instance, a single evaluative
score cannot adequately represent the attitude construct in all its complexity (Egbue and Long,
2012). According to Edbring, Lehner, and Mont (2016), the general attitude towards an object
(service or product) is formed by salient beliefs. Salient beliefs are defined as “the subjective
probability of a relation between the object of the belief and some other object, value, concept, or
attribute.

2.3.2 Effects of affective or emotional attitudes on life insurance uptake

Affective or emotional components of attitude are sympathetic nervous responses and verbal
statements of belief (person’s feelings). The affective component in the theory refers to the
individual’s general level of positive or negative feelings concerning the issue (Gable and Wolf,
2012).

Evaluative responses of the affective type consists of emotions, feelings, or moods that people
experience, when they are confronted with a certain attitude object for instance, legal abortion,
social welfare, ice cream, or information technology. On a measurement level, these responses
can range from extremely positive (for example; emotion of enthusiasm, hope, optimism, or joy)
to extremely negative (such as anger, fear, pessimism, or depression) (Gable and Wolf, 2012).

The affective class of attitudinal responses has long been regarded as dominant. The terms
attitude or evaluation were used synonymously with the term affect (Rankin, 2013). In social
psychology, this phase of attitudinal research that ranged from about1960 up to approximately
1990 is called “primacy of affect” which means that people are more driven by emotional rather
than cognitive stimuli (Hughes, 2008). Therefore in context, consumers can develop emotional
attitudes perceiving the life insurance as being bad or good to buy, foolish or wise to buy and
useless or useful. Hence affecting life insurance uptake and these attitudes can continue affecting
the behavior of the consumer if no action is taken (Achola and Were, 2018; Kasule, 2011;
Alhassan and Biekpe, 2016; Arun et al, 2012; Dror et al, 2016; Fadlallah et al, 2018).
.

14
2.3.3 Effects of cognitive or evaluative attitudes on life insurance uptake

Cognitive component refers to perceptual response and verbal statement of belief (person’s
thoughts). The cognitive component consists of the individual’s beliefs, judgment or thoughts
concerning the issue. When the attitude issue is an action or behavior, the relevant cognitive
structure is considered to be the individual’s beliefs about the instrumental utility of the action
for the attainment or blocking of his or her goals weighted by the value placed on such goals
(Braver, 2012).

Evaluative responses of the cognitive type are thoughts, beliefs, or ideas about the attitude
object. Beliefs are thereby understood to be associations or relationships that people establish
between the attitude object and various attributes (Eisenberg, 2014). The attributes that are
associated with the attitude object express positive or negative evaluation and can, akin to the
affective responses, be located on an evaluative continuum from extremely positive (e.g. useful,
healthy, or wise) to extremely negative (e.g. useless, unhealthy, or foolish) (Hütter and
Sweldens, 2013). Furthermore, cognitive as well as affective responses can be expressed overtly
(e.g. affective reactions as crying, laughing, or the verbal statement that somebody is emotionally
affected by the attitude object; cognitive reactions as verbally stating ones beliefs) or covertly
without any apparent effect. In the insurance context, cognitive attributes may include; belief that
insurance can act as a saving platform or an investment and that it may also act as risk protection
benefits for unforeseen events. For instance; some people believe that insurance may be a saving
vehicle or an investment. Therefore someone may decide to purchase a life insurance cover with
an intention that when he/she becomes sick or gets any problem then, the cost of solving that
particular issue may be shifted to the insurance company. Also in case one does not fall sick or in
case of death then the premium that was initially being paid can be reimbursed to the
beneficiaries or next of kin to that particular policy holder.

Braver,(2012) found that consumers’ perception of life insurance purchase was a guarantee of
the same standards of living for dependents in case of death, ability to maintain the same
standard of living in case of disability, having lump sum money in case of critical illness and
covering of loss on property in case of accident. Saving in insurance is attained from purchasing
life insurance policies providing both death coverage and a saving component, basically policies

15
serving primarily as saving vehicles (Bhoola, et al, 2014; MHLW, 2010; Nzenga, 2013). These
are endowment life insurance policies, which are a term life insurance with a saving component.
These policies generally have higher premiums that include an explicitly or implicitly defined
saving component. Holders of these policies serving primarily as saving vehicles anticipate
achieving regular saving for the future. They also expect from such policies to make long term
savings. By buying saving policies consumers also expect not to rely on state pension for future
survival. For instance, when one takes a policy that allows him to keep the same premium until
the age of say 65, they will have considerable savings when they reach that age.

2.3.4 Effects of behavioral or conative attitudes on life insurance uptake

Behavioral or conative component of attitude implies overt actions and verbal statements
concerning behavior. It refers to the primary motivational or behavioral consequences of
attitudes. Evaluative responses of the behavioral attitudes are explicit actions that people perform
in relation to the attitude object. Although overt, these responses also measured by an evaluative
continuum. Taking for instance nuclear power as attitude object, one group of people might
demonstrate against it and/or chain themselves to the gate of a nuclear power plant, while
another group might “only” express their unfavorable attitude by voting for a political party that
opposes nuclear power. Expressed behavioral intentions with respect to the attitude object are
also categorized to the behavioral response class (Batty et al, 2010).

In the life insurance context, consequences or motivational factors of buying insurance are
agreed as; accessibility or convenience of insurance services, trust and credibility of insurance
firms, price of insurance products and knowledge of the service (Batty et al., 2010).

Convenience is not only the ease of purchase or quick consumption, it also means saving of time,
physical or mental energy at one or more stages of the overall insuring process such as planning,
purchase, servicing, settling claims and consumption(Kuenyehia, 2014).

The easy accessibility of insurance is another most coveted insurance benefit that the customers
look for and is very important in developing a positive attitude towards consumption (The
Standard Bank, 2007). The online access to insurance companies and their policies has made
them more lucrative to the customers.

16
Lack of trust in insurance companies to settle claims in case of actual loss, is one of the most
important issues pointed out by researchers on insurance consumption in developing countries.
Omar (2005) in his study “assesses consumers’ attitudes towards life insurance patronage in
Nigeria” found out that there is lack of trust and confidence in insurance companies. People
reject insurance on grounds that insurers do not pay when it comes to claims settlement and that
the bureaucracy is too much. Trust in insurance is very important because it leads people to sign
up for policies with a peace of mind.

2.4 Socio-economic factors that influence the uptake of life insurance covers.

Socio-economic factors particularly poverty, level of incomes as well as demographic factors

such as age and education attainment affect the adoption of life insurance as discussed below;

2.4.1 Income

Many scholars for instance Ackah and Owusu (2012); Kagucia (2016), have cited that income
has a positive correlation to uptake of life insurance, though this differs from one country to
another. They have asserted that, some life insurance companies won't write a life insurance
policy for someone whose income is below a certain level, though this level varies between
insurance companies. The reason that they impose this restriction is that they don't want to insure
people below a certain income level, since it can result in issuing a large number of small
policies that produce reduced premium flows. The companies see this as a method of cost
containment. On the other hand however Nzenga (2013), to a lower extent disagrees with this
assumptions, stating that this is not always the case though acknowledges that lower income can
impede ones approval for the life insurance though there are no specific justification for this
assertion.

2.4.2 Poverty

Life insurance is not a basic need for many families in developing countries (Odemba, 2013;
Kaguma, 2011). In a country like Uganda where more than 40% live on below one dollar a day,
life insurance is considered luxurious and does not form part of most family’s budgets. This is
the case in most African countries; insurance is seen as a rich man’s product. Many people do
not have enough disposable income to take life insurance.

17
2.4.3 Age
Age of policy holders has been found by different scholars to be associated with the uptake of
different insurance covers. Odemba (2013) found out that young people prefer general insurance
unlike old people whose perception towards the life insurance purchase depends on factors such
as health risks that are associated with old age, the desire to maintain the same standard of living
in case of disability, desire to have savings in case of critical illness and covers in case of
accident. Older people as well according to Proparco (2015), expect that by purchasing life
insurance this is termed as an investment or savings. Whereby by buying such policies they
expect not to rely on state pension for future survival but rather, the policy allows them to
continue leading the same lifestyle.

2.4.4 Education attainment

Education is one of the most important characteristics that might affect the person’s attitudes and
the way of looking and understanding any particular social phenomena (Mirowsky, 2017). In a
way, an individual behaves in regard to some important aspects like purchasing of insurance
covers, is likely to be determined by his or her educational status and therefore it is essential
factors when it comes to the uptake of life insurance. For instance studies have shown that more
than 50% of life insurance policy holders in any given country are always those with at least a
high level of education which is beyond high school. This shows that education is a key factor in
decision making especially on health issues like the uptake of life insurance policies.

2.4.5 Marital status

Marriage is one of the most important social institutions. The perceptions and attitudes of a
person can also differ by the marital status of the persons because marriage might make the
person a little more responsible and mature in understanding and between what is important and
what is not (Mirowsky, 2017). People in marriage and most especially those with children
always tend to be so vigilant due to uncertainties that may arise when there are no funds at hand.
Therefore in preventing such unforeseen events many of those that tend to purchase life
insurance, are always the family people as compared to those that are single.

2.4.6 Occupation
Research has shown that occupation is also one of the key factors that determine the uptake of
life insurance policies (Mirowsky, 2017). People who are in risky occupations such as those

18
working in chemical factories may tend to purchase life insurance covers due to the risk factors
that are associated with what they do. However those in less risk occupations may be reluctant to
do the same hence affecting the uptake of life insurance covers.

19
 CHAPTER THREE
METHODOLOGY
3.1 Introduction

The term research methodology means a system of explicit rules and procedures on which
research is based on and against which claims of knowledge are evaluated (Saunders, Lewi and
Thornhill, 2009). This section therefore presents the methods that were used to carry out the
study on the factors that influence the uptake of life insurance policy in Uganda.

3.2 Research design

A research design is a blue print to conduct a research study, which involves the description of
research approach, study setting, sampling size, sampling technique, tool and methods of data
collection and analysis to answer specific research questions or for testing research hypothesis
(Saunders et al., 2009). This study employed across sectional design, where data was collected in
a single point in time using a mixed approach of both quantitative and qualitative methods of
data collection. Specifically, survey and in-depth interviews were used to collect data in
accordance to the stated objectives. This research design ensured that the evidence that was
obtained effectively addressed the research questions and objectives. A cross sectional design
was chosen because; it is costly and time friendly (Sanders et al., 2009). Therefore given that I
have limited time to conduct the research I opted for a cross sectional design rather than a
longitudinal design which would have been prohibitively expensive and time consuming.

3.3 Study area and target population

The study was carried out in Kampala where Sanlam insurance has been selected as one of the
insurance institutions of interest. The target population of study was comprised of staff members of
Sanlam (employees), clients and other respondents from both the informal and formal institutions
within the area of study. The population of the above categories of respondents is unknown but a
sizable and manageable sample was selected using the William Cochran (1980) formula for
computing the sample size from unknown population as discussed in section 3.5.
The rationale for choosing Sanlam as a case study is that; amongst the insurance institutions that
exist in Uganda, Sanlam was the first life insurance and is also one of the most leading insurance
companies that provide life insurance solutions to people from various backgrounds (Sanlam,

20
2019). This institution also empowers people and communities in situations of poverty, financial
illiteracy as well as enhancing financial inclusion as it encourages social security savings among
the employees and individuals from the informal sectors. Therefore, this study is intended to
inform policy on how the uptake of life insurance to people from various backgrounds among the
Ugandan population can be improved with the intention of enhancing the quality of life among
the Ugandans.

3.4 Sampling techniques

According to Latham (2007), sampling is the process of selecting units from a set of interested
items from which the fairly generalization of the needed results is done. In order to reach out to
the potential respondents, this study adopted purposive and simple random sampling.

 Purposive sampling
To gather qualitative information from Sanlam staff, purposive sampling was utilized. This is
because; this technique is used in selecting items or a group of respondents with particular
characteristics or are knowledgeable about what is being investigated for.

 Simple random sampling

Respondents like clients, employees and individuals from the informal sectors were
sampled using simple random sampling technique. This is a technique which involves
assigning an equal chance to each unit/respondent in the accessible population as stated by
Teddlie and Yu (2007).
3.5 Sample size
The appropriate sample size for this study was 155 respondents. This sample size has been
arrived at by using the formula below as recommended by William Cochran (1980) for
computing the sample size from unknown population
n = tα2/ (4d2)
Where n= the sample size
t= t-value from t-tables,
d= maximum permissible error (7.872%)
α= level of significance (5%)
Thus, n= (1.962)2/ (4 x 0.0061968384)
21
 =3.8416/0.02478735364
=154.982258
n≈ 155 Respondents
The structure was chosen as shown below;
Table 3.1: Sample structure

Category
Method Number Sanlam Other respondents
management (Employees, clients, and
other individuals both in
informal and formal
sectors)
Females Males Females Males
Key informant interviews 5 2 3
Survey (use of questionnaires) 150 75 75
Total 155

3.6 Data collection

3.6.1 Data Collection methods
The study employed surveys and interviews to collect the required data. According to Kumar
(2011), an interview is a set of questions administered through oral or verbal means between the
researcher and the respondent. The interview method was administered among the administrators
of Sanlam, while questionnaires were administered to employees and individuals from various
formal and informal institutions. The survey was also carried out among the respondents who felt
uncomfortable to give their opinion through the interviews.

3.6.2 Research instruments

The study applied two categories of research instruments namely; interview guide for both the
key informants such as company administrators while the questionnaires were administered
among employees, clients and other individuals.

3.7 Data management

Quantitative data which had been collected was captured into Microsoft spread sheet, whereby
they were coded to check for errors and inconsistence. A copy of data was stored on a backup

22
flash disk and on an external hard drive for emergency cases. For instance in cases where the
data would be corrupted by the virus or the laptop being stolen.

3.8 Data analysis

The collected data on the factors that affect the uptake of life insurance in Uganda was cleaned,
processed and analyzed as discussed below;
Qualitative data: The data collected from interviews was carefully cleaned and sorted to
eliminate the inconsistencies and errors that may have been made during the data collection, this
was later coded and categorized into themes and finally interpreted. Interpretation was done
according to the identified thematic areas to create meaning of what had been collected from the
field in line with the stated objectives.
Quantitative data: Data that had been collected through use of questionnaires was analyzed
quantitatively by performing some simple cross tabulation as a way of ascertaining the
distribution of the information. The researchers used Statistical Package for Social Sciences
(SPSS) and Microsoft excel programs for generating interpretable analysis results which were
then presented in form of distribution tables and charts.

3.9 Data Presentation and Analysis

Qualitative information was analyzed thematically through transcribing the responses especially
from interviews and open ended questions into the required outputs in line with the stated
objectives. On the other hand, quantitative information was analyzed using inferential methods
where simple cross tabulations were carried out in order to produce the required outputs. The
presentation of the quantitative outputs involved the use of frequency distribution tables and
charts and qualitative information were presented descriptively.

3.10 Ethical consideration

Standard research ethics were observed for instance;

Necessary approvals were followed. The confidentiality of information unveiled by research

subjects and the anonymity of respondents were respected. The participation in the study was
also on a voluntary basis and free from any coercion and harm.

23
3.11 Study limitations and how they were addressed

The study was constrained by the following limitations;

 Most of the respondents (administrators and those in the business sector) were somehow
busy with their work schedules, so this problem was solved through making early
appointments with them before the data collection date in order to avoid collisions.
 Some respondents were not very open because they feared to disclose their information
due to personal reasons, however, the researcher assured them that the information that
was being collected from them was only going to be used for academic purposes and that
none of its content was going to be disclosed without their consent.

24
 CHAPTER FOUR
RESULTS AND DISCUSSION OF THE FINDINGS
4.0 Introduction
This chapter presents and discusses the findings of the study on factors affecting the uptake of
the life insurance policy in Uganda. Specifically, the study aimed at ascertaining the degree of
life insurance uptake in terms of socio-demographic structure, the attributes of consumer
attitudes that affect the uptake of life insurance and assessing socio-economic factors that limits
the uptake of life insurance cover in Uganda. Sanlam Insurance was selected as a case study so
as to establish on how the above mentioned factors have been affecting the uptake of their life
insurance cover between 2009 when the company was officially launched in Uganda up to date
in 2019. The selection of Sanlam insurance was mainly influenced by the fact that it was among
the first insurance companies that were launched in Uganda specifically to provide life insurance
policies. Hence it was believed to offer firsthand information on the level of life insurance uptake
in the country. The chapter is organized under sub-sections beginning with descriptive findings
followed by inferential findings. Under descriptive analysis, findings on respondents’
demographic information have been computed using frequencies and percentages. These were
presented by the use of frequency distribution tables and figures. While the inferential section
presents study findings on respondents’ responses by use of means and standard deviations. The
findings have been summarized from the primary data collected from a total of 155 respondents
among which questionnaires were used to collect the required information from 150 while an
interview guide was administered among 5 key informants. Data collection and analysis was
guided by the three specific research objectives stated in chapter one.

4.1. Background characteristics of respondents

In this section, a set of personal characteristics namely gender, age, marital status, highest level
of education, occupation and religion were collected from respondents. These were Sanlam
management, clients and from people working both in the informal and formal sectors within
Kampala district. The background information about respondents helped the researcher to
understand characteristics of the sample of the respondents. The results are presented in the
following subsections:-

25
4.1.1 Gender of the Respondents
The research study sought to establish the gender of respondents from who participated in this
study. This was mainly aimed at establishing the level of participation for both sexes in order to
avoid bias. The results for gender distribution of the 150 respondents are shown in table 4.1
below.
Table 4.1: Gender of respondents

Gender of the respondent Frequency Percent

Male 84 56.0
Female 66 44.0
Total 150 100.0
Source: Primary data (2019)

The study indicated that the participation of males in the research study was slightly higher than
that of females but satisfactory. The males accounted for 56% while the females accounted for
44%.
4.1.2 Age of the Respondents
The research study sought to establish the age of the respondents who participated in the study.
The distribution of the population by age is one of the most important characteristics in
understanding their views about particular problems (Vostrikova, 2014). Age indicates the level
of maturity of individuals. Therefore, age was so important to examine the responses. The age
results of the respondents from the participants who took part in the study are shown in the
histogram table 4.2 below.
Table 4.2: Age of respondents
Age group Males Females Other statistics
f % f % Min age 21years
18-24 years 8 9.5 10 15.2 Max age 72 years
25-29 years 21 25.0 18 27.3 Overall Mean age 34.74 years
30-34 years 18 21.4 13 19.7 Male mean age 34.63
35-39 years 20 23.8 9 13.6 Female mean age 34.88
40-44 years 3 3.6 1 1.5 Overall Std. Dev 10.932
45-49 years 9 10.7 5 7.6 Male Std. Dev 1.113
50-60 years 3 3.6 8 12.1 Female Std. Dev 1.462
60 years and above 2 2.4 2 3.0
Total 84 100 66 100.0
Source: Primary data (2019)

26
The results on the age group of participants were more dominated by those within the age group
of 25 years and 29 years though males in this age group are slightly more than females. The
young participant in the study was 21 years while the oldest was 72 years. The mean age was
found to be approximately 35 years. According to Victoria Manukyan, Larisa (2015), age
contributes to the formation of psychological development in maturity and adulthood
development for self- management. Therefore, it can be concluded that since all the respondents
were above 20 years, then the respondents were mature enough and able to self-manage
answering questions without due influence from other persons.

4.1.3 Education level of the Respondents

Education is one of the most important characteristics that might affect the person’s attitudes and
the way of looking and understanding any particular social phenomena. In a way, the response of
an individual is likely to be determined by his or her educational status and therefore it becomes
essential to know the educational background of the respondents. Therefore, in order to find out
one’s academic background or qualification of the respondent, respondents were asked to tick the
option of the academic background and indicate where they belong. The results were shown in
table 4.3 below;
Table 4.3: Education background of respondents
Education level sex of the respondent Total
Male Female
f % f % F %
Ordinary level 0 0.0 6 9.1 6 4.0
Advanced level 35 41.7 23 34.8 58 38.7
Diploma/Certificate 26 31.0 26 39.4 52 34.7
Bachelor's degree 11 13.1 4 6.1 15 10.0
Master's and above 9 10.7 2 3.0 11 7.3
Others 3 3.6 5 7.6 8 5.3
Total 84 100 66 100 150 100
Source: Primary data (2019)

The results suggest that a higher percentage (males (41.7%) and females (34.8%)) of respondents
had at least attained advanced level education followed by diploma holders which accounted for
31% of males and 39.4% females. This implies that most of the participants had some basic
education that could enable them acquire some of the basics offered on life insurance.
Furthermore, basing on the above education finding it can be concluded that most of the

27
respondents were exceptionally able to read and write; hence were able to understand and answer
the questions that were posed to them independently.

4.1.4 Marital status of the respondents

Marriage is one of the most important social institutions. The perceptions and attitudes of a
person can differ by the marital status of the persons because; the marriage might make the
persons little more responsible and mature in understanding and giving the responses to the
questions asked. The details of the marital status of the respondents are presented in bar Figure
4.1below.
Figure 4.1: Marital status

Source: Primary data (2019)

Bar chart 4.1 shows that the greatest number of the respondents were married (116), those
widowed were (4), separated was (12) and the single ones were (18). The results indicate that the
greatest number of respondents was from late adolescent age group, this is the age at which,
normally, a person gets married and shoulders the responsibility of a household and hence more
responsible and mature in understanding and giving the responses to the questions asked.

4.1.5 Occupation
It was also very important to investigate on the occupation of the respondents who participated in
this study. This was mainly aimed at establishing the level of income of the respondents because

28
this is one of the key determinants in regard to uptake of life insurance among various people.
The study was conducted among Sanlam management, employees, clients and members from
both the formal and informal sectors. Their distribution was as shown in Table 4.4.
Table 4.4: Occupation
Occupation sex of the respondent Total
Male Female
f % F % f %
Sanlam management 3 3.4 2 2.9 5 3.2
Sanlam employee 8 9.2 10 14.7 18 11.6
Civil servants 10 11.5 40 58.8 50 32.3
Self-employed from informal sector 31 35.6 14 20.6 45 29.0
Others (farmers, not employed etc) 35 40.2 2 2.9 37 23.9
Total 87 100.0 68 100.0 155 100.0
Source: Primary data (2019)

As seen from table 4.4, the results seem to suggest that civil servants surpassed other
occupations. This accounted for 58.8% of females and 11.5% of male respondents. This was
followed by respondents who were self-employed. For instance those that were working for
instance; in businesses like restaurant, shops, groceries and mechanical work for instance motor
vehicle and motor cycle repair and sale of spare parts among others. While Sanlam employees
accounted for the least responses. All civil servants and self-employed groups as well as other
groups like farmers among others were clients of Sanlam insurance.

4. 2 Presentation of the study findings according to research objectives

This section presents descriptive statistics results on factors affecting the uptake of life insurance
in Uganda. The respondents were provided with questionnaires in order to ascertain the degree of
life insurance uptake in terms of age structure, the attributes of consumer attitudes that affect the
uptake of life insurance and assessing socio-economic factors that limits the uptake of life
insurance cover in Uganda. To accomplish all these, the question had been formulated using a
five-point Likert scale. According to Dunn, et al. (2014), a Likert scale is the mean of responses
on several Likert items; which are statements that the respondent is asked to evaluate
accordingly. For the case of the current study, the scales were rated differently based on the
objectives. On objective one, the five level scales were; 1 = strongly disagree, 2 = disagree, 3=
neutral, 4 = agree, 5 = strongly agree. While for objectives 2 and 3 the scales were; 1 = Not at
all, 2 = to a low extent, 3 = to a moderate extent, 4 = to a large extent, 5 = to a very large
extent.The study also had standard deviations which were mainly aimed at indicating the

29
variation in the responses of participants on a particular question. According to Goos and
Meintrup, (2015), the lower the standard deviation (Std.Dev) for instance (less than 1), the better
and if it is Std. Dev is greater than 1, then there is much variation in the responses.
The mean score and standard deviation (Std.Dev) of each Likert item on the continuous Likert
scale was determined and interpreted whether the respondents were in disagreement, neutral or in
agreement on each questionnaire item using the information illustrated in Table 4.5below;
Table 4.5: Interpretation of the mean score on the Likert scale items
Means score Measure
1.0 ─ 2.49 Disagreement
2.5 ─ 3.49 Neutral
3.5 ─ 5.0 Agreement
S.D > 1 indicates more significance in responses
Source: Goos and Meintrup (2015)

4.2.1 The degree of life insurance uptake in terms of demographic structures in Uganda
4.2.1.1 Possession of Insurance Policy
Before the study ascertained the degree of life insurance uptake in Uganda in terms of age
structure, respondents were first requested to indicate whether they had insurance and if yes, then
they had to indicate which policy cover. The findings are indicated below;
Table 4.5: Possession of Insurance Policy
Which insurance cover do you have? Total
Which insurance firm did you Life General
Both
purchase your insurance cover from? Insurance Insurance
f % f % f % f %
Sanlam insurance 20 64.5 0 0.0 0 0.0 20 13.3
UAP insurance 6 19.4 0 0.0 0 0.0 6 4.0
Britam insurance 3 9.7 25 29.8 11 31.4 39 26.0
Others( AIG, Gold star, APA, Excel etc) 2 6.5 59 70.2 24 68.6 85 56.7
Total 31 100.0 84 100.0 35 100.0 150 100.0
If you don’t have life insurance, do you wish to buy one soon?
f % f % f % f %
Yes, if it becomes manageable 0 0.0 53 63.1 0 0.0 0 0.0
No and I don’t need it 0 0.0 31 36.9 0 0.0 0 0.0
Total 0 0.0 84 100.0 0 0.0 0 0.0
Source: Primary data (2019)

30
As seen from table 4.5 above, a big number of participants 70.2% non-life insurance covers,
while a big number of those that were holding both life and non-covers were 68.6%. There were
only 26 respondents that were purely life insurance policy holders, and about 65% of them had
their policies from Sanlam insurance company while 19.4% were from UAP insurance.
Among those who did not have life insurance, about 63% of them stated that they wish to
purchase one in the near future if and only if the premium becomes manageable. While about
37% of them stated that they had no intension of purchasing one, citing their dissatisfactions.

4.2.1.2 Possession of Insurance Policy according to gender

The section presents the distribution of insurance cover possession in relation to gender of
respondents.
Table 4.6: Possession of insurance policy according to gender
sex of the respondent
Which insurance cover do you have? Male Female Total
f % f % f %
Life Insurance 14 16.7 17 25.8 31 20.7
General Insurance 48 57.1 36 54.5 84 56.0
Both 22 26.2 13 19.7 35 23.3
Total 84 100.0 66 100.0 150 100.0
Source: Primary data (2019)

As illustrated from table 4.6 above, life insurance was highly adopted by females (25.8%) than
males (16.7%). The reason for this could be the health risks especially the reproductive health
related uncertainties that are associated with women than men. men on the other hand preferred
non-life insurance, something that could be associated with the fact that most men are often
associated with business which in most cases need insurance cover in case of any loss due to fire,
theft of accidents.

4.2.1.3 Possession of insurance policy according to age

The results in figure 4.2 indicated that uptake of life insurance was also determined by age of
respondents. For instance, life insurance was highly prevalent among age groups 45 years. This
could be because of the health risks that are associated with old age that calls for insurance
protection. The study also revealed that life insurance was also high among those that were
below 24 years. Most of these age groups indicated that their parents had purchased for them life
insurance when they were still young. On the other hand, ages between 25 years to 44 years

31
preferred general insurance which is mainly aimed at protection against risks and losses. This
could have been so since this is the most active working age group which most associate
themselves with variety of business ventures that need protection against uncertainties.
30
Life Insurance General Insurance Both
25 24
N=150
20
20 18
Frequency

15
12
11
10 8 8
6 6
5 5
5 4 4
3 3 3 3
2 2
1 1 1
0 0
0
18-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-60 years >60 years
Age Group

Figure 4.2: Possession of insurance policy according to age

4.2.1.4 Possession of Insurance Policy according to education attainment

This section presents the finding on the uptake of life insurance policy in relation to the level of
education attained (Table 4.7).
Table 4.7: Possession of insurance policy according to education attainment
Which insurance cover do you have?
Education level Life Insurance General Insurance Both Total
f % f % f % f %
Ordinary level 1 3.2 5 6.0 0 0.0 6 4.0
Advanced level 10 32.3 35 41.7 13 37.1 58 38.7
Diploma/Certificate 7 22.6 30 35.7 15 42.9 52 34.7
Bachelor's degree 7 22.6 6 7.1 2 5.7 15 10.0
Master's and above 4 12.9 4 4.8 3 8.6 11 7.3
Others 2 6.5 4 4.8 2 5.7 8 5.3
Total 31 100.0 84 100.0 35 100.0 150 100.0
Source: Primary data (2019)
The findings from table 4.7 indicated that education is also one of the key determinants of life
insurance uptake. For instance, respondents who had bachelor’s and master’s degree and above

32
had purchased life insurance more than those with ordinary and advanced level of education.
Despite the difference, a big number of respondents with Advanced level of education (32.3%)
had purchased life insurance.

4.2.1.5 Possession of Insurance Policy according to marital status

The study also sought to establish the level of life insurance uptake in relation to marital status.
The findings are illustrated in Table 4.8.
Table 4.8: Possession of Insurance Policy according to marital status
Which insurance cover do you have?
Marital status Life Insurance General Insurance Both Total
f % f % f % f %
Single 7 22.6 10 11.9 1 2.9 18 12.0
Married 21 67.7 67 79.8 28 80.0 116 77.3
separated 1 3.2 7 8.3 4 11.4 12 8.0
windowed 2 6.5 0 0.0 2 5.7 4 2.7
Total 31 100.0 84 100.0 35 100.0 150 100.0
Source: Primary data (2019)
Life insurance uptake as seen in table 4.8 was high (67.7%) among the married individuals. Also
half of the widowed respondents had purchased life insurance while half had both life and
general insurance. On the other hand, the singles and those that had separated had low uptake of
life insurance.
4.2.1.6 Possession of insurance policy according to occupation.

Table 4.9 below shows the uptake of life insurance policy by respondents in relation to their
occupation.
Table 4.9: Possession of insurance policy according to occupation
Which insurance cover do you have?
Occupation Life Insurance General Insurance Both Total
F % f % f % f %
Civil servant 14 45.2 24 28.6 12 34.3 50 33.3
Self employed from informal 11 35.5 26 31.0 8 22.9 45 30.0
Others (farmers, not employed etc) 3 9.7 26 31.0 8 22.9 37 24.7
Total 31 100.0 84 100.0 35 100.0 150 100.0
Source: Primary data (2019)

Life insurance uptake was found to be influenced by the type of occupation. For instance civil
servants were found to hold higher life insurance policy than the self-employed and other groups

33
like farmers and those that are not employed. The reason for this could be could be associated
with a number of benefits that are sometimes extended to employees from public services, where
health care is often inclusive. Despite that self-employed persons also had some good number of
those that had life insurance.

4.2.1.7 Reasons why participants bought or wish to buy life insurance

After establishing the level of life insurance uptake in relation to socio-demographic factors, the
researcher also went on to investigate the reason as to why respondents (Life insurance policy
holders and those that were about to buy) had bought or wished to buy life insurance. Their
responses are presented in table 4.10 below.

Table 4.10: Reasons for buying or wishing to buy Life Insurance

Reasons for buying or wishing to buy life insurance Frequency Percent
Life insurance is a form of emergency
Strongly disagree 8 5.3
Disagree 16 10.7 Mean=3.5733
Not sure 38 25.3 Std. Dev=1.08897
Agree 58 38.7
Strongly 30 20.0
Total 150 100.0
Life insurance is a form of investment
Strongly disagree 4 2.7
Disagree 29 19.3 Mean=3.5133
Not sure 34 22.7 Std. Dev=1.10360
Agree 52 34.7
Strongly Agree 31 20.7
Total 150 100.0
Life insurance improves on welfare
Strongly disagree 4 2.7
Disagree 33 22.0 Mean=3.3933
Not sure 36 24.0 Std. Dev=1.07377
Agree 54 36.0
Strongly Agree 23 15.3
Total 150 100.0
Life insurance is a form of security for unforeseen uncertainties
Strongly disagree 4 2.7
Disagree 29 19.3 Mean=3.4600
Not sure 38 25.3 Std. Dev=1.07834

34
Agree 52 34.7
Strongly Agree 27 18.0
Total 150 100.0
Others (I.e. It can be used to pay off any debts that you leave behind that would be a burden to
your family etc)
Strongly disagree 4 2.7
Disagree 27 18.0 Mean=3.5400
Not sure 36 24.0 Std. Dev=1.10296
Agree 50 33.3
Strongly Agree 33 22.0
Total 150 100.0
Source: Primary data (2019)

As seen from table 4.10, the findings indicate that most of the respondents had bought life
insurance with the impression that it acts as a form of emergency. For instance, the results
suggest that majority of the respondents (38.7%), were in agreement on the questionnaire item
that “Life insurance is a form of emergency”. These findings had the (mean = 3.5733, standard
deviation = 1.08897). This shows that most people are often encouraged to buy life insurance
since it can save someone in cases of emergency situations like abrupt sickness. The standard
deviation being 1.08897 suggests that the variation in the responses from respondents was
significantly varied meaning that some respondents were in agreement while others were in
disagreement on the questionnaire items.

The results as well revealed that life insurance acts as a form of investment since someone can
save his/her money in terms of premiums and then claim later after. For instance, according to
the findings in table 4.10, about 34.7% of respondents were in agreement with the questionnaire
item. This factor had the (mean=3.5133, standard deviation = 1.10360).

The researcher also found out that most life insurance policy holders in Kampala purchased their
policies because of the feeling that their welfare would change once they have the policy.
According to the results as indicated in table 4.10, more than 36% of the respondents were in
agreement with the questionnaire item which stated that “life insurance improves on welfare”.
This factor had the (Mean=3.3933, standard deviation=1.07377).

35
Life insurance customers were also motivated to purchase their policies because of security
purposes. The results in table 4.10 indicated that majority of respondents (34.7%) were in
agreement while commenting on the questionnaire constructs which stated that, “Life insurance
is a form of security for unforeseen uncertainties”. This factor had the (Mean=3.4600, standard
deviation=1.07334.

Also about 33.3% of the respondents mentioned to have purchased life insurance because of
other factors which had not been stated in the questionnaire. For instance, some respondents
mentioned that in case of death, life insurance can be used to pay off any debts like a mortgage,
credit cards, car loans among others that you leave behind which would be a burden to your
family. Other stated that life insurance can also be used to cover all your funeral expenses
something that is often have a dramatic impact on your family and their lifestyle in case you had
left them with nothing. This factor had (Mean=3.5400, standard deviation=1.102996).

4.2.1.8Reasons why participants never bought or don’t wish to buy life insurance
The researcher also investigated about reasons why some respondents had not purchased life
insurance policies and were not willing to buy one. The responses to this section are illustrated in
Table 4.11 below;
Table 4.11: Reasons for not buying or not wishing to buy life insurance
Reasons for not buying life insurance Frequency Percent
Life insurance is a wastage of money in case you don’t fall sick
Strongly disagree 6 4.0
Disagree 31 20.7 Mean=3.6467
Not sure 34 22.7 Std. Dev=1.15006
Agree 48 32.0
Strongly Agree 31 20.7
Total 150 100.0
Life insurance products are not affordable to me
Strongly disagree 6 4.0
Disagree 27 18.0 Mean=3.6600
Not sure 24 16.0 Std. Dev=1.19748
Agree 48 32.0
Strongly Agree 45 30.0
Total 150 100.0
Most insurance companies that provide life insurance are not trust worthy
Strongly disagree 6 4.0

36
 Disagree 31 20.7 Mean=3.467
Not sure 34 22.7 Std. Dev=1.15006
Agree 48 32.0
Strongly Agree 31 20.7
Total 150 100.0
Source: Primary data (2019)
The researcher discovered that, the main reason as to why many people failed to buy life
insurance was because many had a feeling that they will lose a lot of money in premium in case
they do not become sick. The findings indicated that about 32% were in agreement with the item
which stated that “Life insurance is a wastage of money in case you don’t fall sick” while 22.7%
were neutral on commenting on it. The factor had, (Mean=3.6467, standard deviation=1.15006)”.

On the cost of life insurance, the results from table 4.11 indicate that, most of the respondents
had not acquired life insurance policy because they felt that it was not affordable for them. This
was evidenced by 32% of respondents who were in agreement, while 30% strongly agreed on the
questionnaire construct which stated that “life insurance products are not affordable to me,
(Mean=3.6600, standard deviation=1.19748)”.

The study also found out that trust was another issue that prevented many respondents from
buying life insurance policies. As seen from table 4.11, about 32% of respondents were in
agreement with the questionnaire item which stated that “Most insurance companies that provide
life insurance are not trust worthy”, this item had the (Mean=3.466, standard
deviation=1.15006)”. There were other factors that prevented respondents from buying life
insurance covers apart from the items which had been mentioned above.

Qualitative findings also indicated various factors that make people either to purchase or not
purchase life insurance. For instance, while conducting an interview with one of the key persons
from Sanlam insurance Ltd; this is what he had to say;

Many people think that generally insurance companies are here to exploit people.
However, they only come to understand its importance when they are being confronted
with uncontrollable uncertainty like chronic diseases which sometimes treating them
requires a lot of money especially those diseases that may require someone to be flown
abroad. So trust is the key issue while some claim that the costs are too high which is not

37
 true because we have different packages that suits each and every individual’s needs. For
the few who have come to us for inquiry we have been able to sensitize them and have
really understood the benefits of the life insurance (Aaron, underwriter at Sanlam
insurance Ltd).

4.3 The extent to which consumer attitudes affects the uptake of life insurance
This section sought to investigate the extent to which consumer attitudes affect the uptake of the
life insurance policy in Uganda. Knowing how people perceive life insurance was one of the
most important aspects to look at since studies have shown that adoption of any product or a
service in most cases is often determined by one’s level of understanding of that particular
product or service and their perception towards them. The results are shown in Table 4.12;

Table 4.12: Extent to which consumer attitudes affects the uptake of life insurance

Key: MR= Mean Rating; SD=Std.Dev; RI= Likert Scale

The findings on the extent of consumer attitudes towards the uptake of life insurance revealed
that negative perception towards uptake of life insurance among many people in Uganda is
influenced by a number of factors among which include;

Low awareness about life insurance products and benefits among the public; A big number about
28% of respondents stated that low level of awareness to a very large extent affects the level of
uptake in the country. This factor also yielded a moderate mean score of 3.55 and standard
deviation (SD=0.09761) which indicated that there was a unanimous response on this factor of
low level of awareness. Other factors which affected consumers attitudes to a larger extent

38
included: Fear for complicated policy documentation by insurance companies (Mean=3.6133,
Std.Dev=1.20840), fear for sophisticated technology has made policy covers to be un-trusted
(Mean=3.51433, Std.Dev=1.12767), Poor customer service among the life cover providers
(Mean=3.5073, Std.Dev=1.23014) and Others (i.e. Low consolidation and Merger by insurance
companies to ease the services etc) (Mean=3.5143, Std.Dev=1.23014).

Among factors that were found to affect consumer attitudes to a moderate extent included:
perceived bad image and reputation of insurance companies in life cover provision towards the
public (Mean=3.3867, S.D=1.15733), Low professionalism in companies and by sales persons
(Mean=3.4067, Std.Dev=1.18773) and poor product packaging with various benefits that are not
suitable for all groups (Mean=3.3876, Std.Dev=1.10852).

While shortage in life insurance provision outlets (many centralized offices mostly based in big
towns)(Mean=2.8267, Std.Dev=1.25718), Poor Distribution Channels (Mean=2.8800,
Std.Dev=1.25276) and unfavorable government regulatory changes i.e. increase in tax on policy
covers (Mean=2.1267, Std.Dev=.86153) were rated to affect consumer attitudes to a lower
extent.

Qualitative results were also comparable to the quantitative findings. For instance, while carrying
out an interview with one of the key personnel from the claim assessment section in Sanlam
insurance about the extent of consumer attitudes towards uptake of the life insurance policy in
Uganda, she had the following to say;

I can say that most people are very hard to be convinced especially about the new
products like life insurance. Some people think that life insurance is for rich people while
some think that it is a westernized ideology. I can blame consumers for not seeking for
right information before making judgment, however we as the providers of life insurance,
we have also not done enough to sensitize the public about its importance for the last ten
years we have been in Uganda. But we are in the process; everything will be okay soon
(Namuli, claim assessment department, Sanlam insurance, Uganda).

39
4.4 The extent to which socio-economic factors affect the uptake of Life Insurance cover in
Uganda
The researcher also examined the extent to which socio-economic factors are limiting the uptake
of the life insurance cover in Uganda. The respondents were asked to rate the effect of some
selected socio-economic factors on the uptake of life insurance. Among the factors looked at,
included are; affordability to all social classes, ones’ level of income in relation to uptake, one’s
preference level among other factors as presented in table 4.13 below.

Table 4.13: Extent to which socio-economic factors affect uptake of life insurance cover in Uganda
To what extent do the following Very
socio-economic factorsaffect Not Low Moderate Large Large
your Uptake of life insurance? At all Extent Extent Extent extent
(N=150) f % f % f % f % F % firi SD MR
Life insurance is not affordable
6 4.0 17 11.3 28 18.7 54 36.0 45 30.0 565 1.12 3.77
to all social classes
Life covers needs high level of
8 5.3 25 16.7 24 16.0 48 32.0 45 30.0 547 1.22 3.65
income hence only good for rich
It is not suitable for unemployed 0 0.0 19 12.7 28 18.7 42 28.0 61 40.7 595 1.05 3.97
High level of dependants reduce
disposable income to buy life 2 1.3 37 24.7 28 18.7 48 32.0 35 23.3 527 1.14 3.51
insurance
Difference in social security
4 2.7 23 15.3 28 18.7 44 29.3 51 34.0 565 1.16 3.77
savings can affect its uptake
Life insurance is affected by
occupation type(I.e. good for
6 4.0 15 10.0 51 34.0 58 38.7 20 13.3 521 0.98 3.47
civil servants, those working in
risky jobs etc)
Other factors (i.e. differences in
3 2.0 34 22.7 37 24.7 43 28.7 33 22.0 519 1.13 3.46
pressing needs etc)
Total 3839 7.80 25.59
Average (SD, Mean Rating) 1.11 3.66
Key: MR= Mean Rating; SD=Std.Dev; RI= Likert Scale
Source: Primary data (2019)
The findings as illustrated in table 4.13 above revealed that socio-economic factors play a big
role in the uptake of life insurance in Uganda. For instance the findings indicated that
affordability of life insurance to a large extent affects its uptake in Uganda where more than 80%
of its citizens lie between middle and low income classes. This factor was mentioned by about
36% of respondents and yielding (Mean=3.7667, Std.Dev=1.11978).

Also about 30% of respondents stated that life insurance is meant for the rich in Uganda since its
premiums can only be afforded by the rich (Mean=3.6467, Std.Dev=1.22138), something that to

40
a very large extent affects its uptake especially among those with low or no disposable incomes.
At the same time about 41% of respondents also added on this by saying that life insurance
premium packages currently in Uganda are not suitable for the majority low income people
(Mean=3.9667, Std.Dev=1.05179).

About 32% of respondents stated that to a large extent uptake of life insurance in Uganda is
affected by socio-economic factors owing to the fact that some people have many dependents so
the little income one may be getting is often spent on more pressing needs of the dependents
hence reducing disposable income that would be spent on buying life insurance. This in the long
run can affect uptake of life insurance (Mean=3.5133, Std. Dev =1.13951) because of their
varied interests than the poor people.

On the other hand difference in social security savings can affect uptake of life insurance. For
instance people who keep on saving on some social security fund while they are still working are
likely to be able to buy life insurance when they reach their old age unlike those who don’t save.
These to a very large extent influence the uptake of life insurance. For instance 34% of
respondents stated that old people with good savings are likely to take up life insurance when
they become vulnerable to sickness (Mean=3.7667, Std.Dev=1.15518).

Life insurance is affected by occupation type, for instance life insurance may be good for those
working in risky places which is also stated by 34% of respondents that to a moderate extent
influences the uptake of life insurance (Mean=3.4733, Std.Dev=.98101).

While other factors like having a big family size with more differences in pressing needs in
households may reduce disposable income, something that can hinder one from purchasing life
insurance. This factor was mentioned by about 25% of respondents that it can hinder uptake of
life insurance (Mean=3.4600, Std. Dev=1.12703).

Qualitative findings also had almost similar responses. For instance while conducting an
interview with one of the Internal Credit Control officer about the extent to which socioeconomic
factors affect the uptake of life insurance sector in Uganda, he gave the following statement:

Life insurance covers are somehow costly compared to general insurance covers which
only cater for risks like losses, fire and theft. Life insurance is about someone’s life,

41
 when you get committed to issue out a life insurance cover to someone, it means you have
accepted that whatever health issue that person may be diagnosed with then you need to
play your part by fulfilling the extension of the services towards catering for his/her
medical expenses which sometimes may be costly too. So we have a premium rate that
each and every person needs to contribute depending on his/her income, something that
sometimes leaves out those that are not employed or those that have low incomes.
However, we are designing more premium packages that will be extended to those in low
income classes (Kelas, Credit Administration and Reporting section, Sanlam Ltd).

4.5 Discussion of the findings

According to the African Insurance Organization (AIO), 2019 report, insurance penetration in
Uganda is less than 1% and life insurance uptake is even much lower. According IRA (2019)
figures, the overall contribution of the insurance sector to Uganda's GDP as per 2017/2018
financial year was at 0.81%, these figures are too low compared to economies like South Africa
which had more than 8% in the same financial year. Uganda also lags behind among the East
African’s countries like Kenya whose life insurance penetration is more than 1.3%. The low
penetration rate and low uptake of life insurance has been cited to be caused by a number of
factors.

The current study therefore sought to assess factors that affect the uptake of the life insurance
policy in Uganda, focusing on Sanlam insurance ltd as a case study. The study specifically
ascertained the degree of life insurance uptake in terms of demographic structures, examined the
extent to which consumer attitudes affects the uptake of life insurance and assessed socio-
economic factors limiting the uptake of life insurance cover in Uganda.

The study employed a cross sectional study design with mixed methods. The choice for cross
sectional design was due to its advantages that enable a lot of information to be collected from a
sizeable population in a highly economical way (Saunders, et al. 2009). Furthermore, cross
sectional design enables researchers to use smaller groups of people to make inferences about
larger groups which would have been prohibitively expensive to study (Kothari, 2004). The
design was based on a mixed approach of both quantitative and qualitative methods which
included survey (Administered among 150 respondents who included Sanlam employees, clients

42
and members from other formal and informal institutions) and key informant interviews
(administered among 5 Sanlam management). According to Teddlie and Yu (2007), qualitative
and quantitative methods are compatible and hence can be used at the same time. Thefore, the
current study adopted mixed approach for triangulation purpose. For instance, qualitative
responses were used as a clarification and a supplement for information that had been collected
through questionnaires.

On regard to the degree of life insurance uptake in terms of socio-demographic structures, the
findings revealed that life insurance adoption is greatly influenced by demographic structures
such as age, gender, education, occupation and marital status. For instance, according to the
findings of the current study, uptake of life insurance accounted for about 21% (31 respondents)
unlike general insurance which had 56%. However, among the 31 life insurance policy holders,
females accounted for higher number (55%) while males accounted for about 45%. While
carrying out a study on determinants of life insurance uptake in Pakistan, Ahmed et al (2010)
asserted that women tend to purchase life insurance covers than men due to their vulnerability to
health risks especially the reproductive health related uncertainties than men, something that
often makes them to be more vigilant towards safeguarding themselves against any unforeseen
health issues. Life insurance uptake was also found to be determined by age of respondents. For
instance, the findings indicated that life insurance uptake was high among age groups 24 years
and below and those ones above 45 years. According to Alhassan and Biekpe, (2016), age groups
above 45 years tend to take up life insurance because of health risks that are associated with old
age. While the young ones especially those below 24 years could be beneficiaries of their
parents.

In regard to education status, the findings indicated that people with higher education had
adopted life insurance more than those with lower education levels. This finding is also similar to
the study that was carried out in Kenya by Odemba (2013) whose findings suggested that the
more one gets educated the more he/she understands the benefits of life insurance hence he/she
ends up purchasing one that those who are not educated or those with low education levels. With
regard to uptake of life insurance according to one’s marital status, the findings revealed that life
insurance uptake was high among the married individuals than the singles, separated or divorced.
According to Mirowsky (2017), marriage is one of the most important social institutions that
might make an individual a little more responsible because of the obligation they have to offer to

43
their families where health concerns are also catered for. Therefore, the married people and more
so those with children always tend to purchase life insurance than other groups due to the need to
protect their families against unforeseen events. Uptake of life insurance was found to be
influenced by respondents’ occupation. The civil servants were found to hold higher life
insurance policy than the self-employed and other groups like farmers and those that are not
employed. Mirowsky (2017) asserts that the reason for this can be associated with benefits that
civil servants often get than those in the informal sectors.

While examining the attributes of consumer attitudes that affects the uptake of life insurance, the
findings of the study revealed that adoption of life insurance in Uganda is influenced by various
consumer perceptions, however, the key factors included: Fear that they may end up losing a lot
of money in premium in case they do not become sick because most medical covers are in most
cases not refundable unless one gets sick or dies before the premiums paid can be reimbursed to
the beneficiaries. Hence, this limits uptake of the policy. The issue of affordability of the policy
also had negative effects on the attitudes of respondents towards buying life insurance. However,
others did not trust the life insurance providers. According to the study on motivations and
barriers which was conducted by Edbring et al (2016) to uncover the consumer attitudes towards
alternative models of consumption, they found out that negative atittudes play a key role as a
barrier that demotivates people from exploring new ideas. Similarly in a study by Egbue and
Long (2012) that aimed at establishing barriers to widespread adoption of electric vehicles, they
found out that many people especially in the middle and low income countries failed to purchase
electric vehicles due to negative attitudes that they may fail to work without trying them out.
Other scholars like Fadlallah et al (2018) also investigated about the barriers and facilitators to
implementation, uptake and sustainability of community-based health insurance schemes in low-
and middle-income countries and found out that low and middle income countries had low
uptake to community-based health insurance schemes because of negative attitudes towards
them. Similarly, a study by FinScope Survey (2018) on Uptake of Insurance Services in Uganda.,
also revealed that Uganda has low levels of insurance uptake and may continue like that for
many years because of negative attitudes that Ugandan’s have towards insurance services.

With regard to the extent to which socio-economic factors affect the uptake of life insurance in
Uganda, the findings revealed that socio-economic stress remain realities of our daily life for a

44
substantial proportion of families in Uganda. In that families that are under economic stress for
instance, those that are not employed or those that get less pay are more likely not to associate
themselves with life insurance due to their low levels of disposable incomes compared to
families that are economically stable. The results of this study on this issue indicated that they
were willing to buy life insurance but they could not because the policies were not affordable.
Many felt that life insurance was mainly designed for the rich, educated and those people who
are famous. Such responses were also found in studies like: Odemba (2013); Orem and
Zikusooka (2010); Ahmed et al (2010); Alhassan and Biekpe (2016); Arun et al (2012);
FinScope Survey (2018). When Sanlam administrators were approached in order to get their
opinion on why Uganda continues to grapple with low uptake of life insurance yet Sanlam has
been in the country since 23rdMarch 2010 according (Uganda Insurance Association, 2011)2, it
was found out that plans are underway to address the above stated issues. They were to promote
uptake of life insurance in Uganda.

2
http://uia.co.ug/sanlam-life-insurance-u-ltd/

45
 CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

The purpose of the study was to assess and establish the factors that are associated with the
uptake of life insurance in Uganda using Sanlam insurance as a case study. Specifically, the
study aimed at ascertaining the degree of life insurance uptake in terms of socio-demographic
structure, the attributes of consumer attitudes that affect the uptake of life insurance and
assessing socio-economic factors that limits the uptake of life insurance cover in Uganda. This
chapter therefore presents a summary of findings, conclusions and recommendations about the
study. Conclusions and recommendations were drawn basing on the findings in chapter four and
are also made to inform and guide on the formulation of policies and strategies that would help
improve on the proportion of individuals’ purchasing life insurance in Uganda.

5.2 Summary of the findings

5.2.1 The degree of life insurance uptake in terms of demographic structures in Uganda

The study revealed that, uptake of life insurance varies significantly with demographic factors.
For instance; uptake of life insurance was found to be high among females than males. Those
people that were 45 years and above and those ones that were below 24 years had higher uptake
of life insurance than the middle working age groups (25-44 years). With regard to education,
those that were more educated (bachelors and above), had higher uptake of life insurance than
the least educated. This could be due to exposure to more knowledge on importance and benefits
of life insurance by the more educated individuals. According to marital status, many of the
married individuals had purchased life insurance than the singles, separated, divorced and the
widowed. In regard to occupation, the civil servants, and those individuals who were working in
risky occupations had more life insurance covers than other groups like the farmers, self-
employed among others.
5.2.1.1Reasons why participants bought or wish to buy life insurance

The findings indicate that most of the respondents had bought life insurance because of different
reasons. For instance, many had the impression that it acts as a form of emergency, or
investment. Others purchased their policies with a feeling that their welfare would change once

46
they have the policy. Others were also motivated to purchase their policies for security purposes.
However, some respondents mentioned that in the case of death, life insurance can be used to
pay off any debts like a mortgage, credit cards, car loans among others that you leave behind and
would have been a burden to your family. While others stated that life insurance can also be used
to cover all your funeral expenses, this is something that is often having a dramatic impact on
your family and their lifestyle in case you had left them with nothing.

5.2.1.2Reasons why participants never bought or don’t wish to buy life insurance
On the other hand, those that had no life insurance and never had any plan of purchasing it stated
that they did not have trust in life insurance and their providers. They stated that you cannot
benefit from life insurance unless you are sick or dead which many find discouraging. Others felt
that it was not affordable for them.

5.2.2 The extent to which consumer attitudes affects the uptake of life insurance

The findings on the extent of consumer attitudes towards the uptake of life insurance revealed
that negative perception towards uptake of life insurance among many people in Uganda is
influenced by low levels of awareness about life insurance products and benefits among the
public; fear for complicated policy documentation by insurance companies, fear for sophisticated
technology has made policy covers to be un-trusted and poor customer service among the life
cover providers. They also stated that some companies have bad image and reputation when
providing life cover to the public since most of their sales agents have low professionalism. They
also stated that companies also have poor product packages that are not suitable for all groups.
At the same time they also stated that there are shortages in life insurance provision outlets
(many centralized offices mostly based in big towns) also some of them have poor Distribution
Channels.

5.2.3 The extent to which socio-economic factors affect the uptake of life insurance in
Uganda
With regard to the extent to which socio-economic factors are limiting the uptake of life
insurance cover in Uganda. The findings revealed that socio-economic factors play a big role in
the uptake of life insurance in Uganda. For instance the findings indicated that affordability of
life insurance, difference in occupation, difference in income levels; difference in family size for

47
instance dependence levels by other people, difference in social security savings among others
greatly affect the uptake of life insurance in Uganda.

5.3 Conclusion of the findings

The study revealed that there is a lot of ignorance about the benefits of life insurance among
Ugandans due to low levels of awareness. However, many people are also hindered by a number
of factors ranging from socio-demographic factors, attitudes, and socio-economic factors
particularly, financial constraints. This has complicated their decisions to take up life insurance
covers. In addition to high ignorance levels, there are also high levels of financial illiteracy
among many Ugandans especially among the low income earners, something that is strongly
linked to low uptake of life insurance. Therefore, marketers of life insurance services targeting
these groups are often confronted with the challenges of convincing or encouraging them to
embrace life insurance and its associated benefits. Basing on the findings, this study therefore
confirmed that there is a negative attitude of many people towards the uptake of life insurance
and its products. This is partially due to low levels of knowledge and awareness which has
caused a lot of ignorance in them about the life insurance services, henceforth these are
influential reasons for not buying life insurance.

5.4 Recommendations
Basing on the study findings, the research puts forward the following recommendations;
 Marketers of life insurance services should formulate and implement relevant marketing
strategies(such as designing packages that are affordable to all social classes, creating
awareness about the benefits of life insurance, building relationships with the public,
Providing complimentary offer, increasing sales through repetitive strategies,
encouraging people to contribute towards life insurance through an investment which is
set up by insurance firms, they can also emphasize its long-term benefits etc) towards
addressing the knowledge gap among the people from both the formal and informal
sectors. This will lure most of them to embrace and adopt life insurance.
 Sensitization or better marketing strategies should be required to encourage the middle
aged generation between 25 and 44 years of age, and those who are the less-educated to
embrace and appreciate the role of life insurance which is for their benefit especially in
cases where uncertainties like accidents happen.

48
 The Insurance regulatory authority in Uganda (IRA) should help its members by offering
basic information and benefits of life insurance to the general public that intends to
purchase one. This will help in boosting the level of life insurance consumption
especially among all Ugandans.

49
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 APPENDICES

Appendix I: Key Informant Interviews (KII) guiding questions.

1. What is your designation?

2. How long have you been in your current position in this organization?
3. What do you understand by life insurance and its importance in simple terms?
4. What has been the level of life insurance uptake between 2010 when Sanlam
started operating in Uganda and now (2019)?
5. (a) In your opinion, does consumer attitude affect the uptake of life
insurance?
(b) If so in which ways does it affect?
6. (a) Do consumers’ socio-economic factors affect the uptake of life insurance
cover in Uganda?
(b) If so in which ways?
7. What remedies have you put in place to address the above socio-economic bottlenecks
that affect the uptake of life insurance?
8. Are there any other factors that you think would affect the uptake of life insurance?
9. In your view, what can be done to improve on the uptake of life insurance in Uganda?

Thank you for your time

53
 Appendix II: Questionnaire

Dear respondent,
I am a student pursuing an MBA degree at Makerere University. I am currently undertaking my
final year research on “factors affecting the uptake of life insurance in Uganda: a case study of
Sanlam insurance company.”You are kindly requested to provide answers to these questions as
honestly and precisely as possible. This research is purely for academic and therefore responses
to these questions will be treated with utmost confidentiality. Please tick where appropriate or fill
in the required information in the spaces provided. Your assistance will enable this study to come
up with accurate findings on the above topic.

Please tick or put any mark in the box that represents your opinion response.

SECTION A: SOCIO – DEMOGRAPHIC INFORMATION

No. Question construct Reaction

1 Gender 1 = Male
2 = Female
2 Marital status 1 = Married
2 = Single
3 = Divorced/Separated
4 = Widowed
3 Age group 1= Under 18
2= 18-24 years
3= 25-39 years
4= 40-49 years
5=50-59 years
6= 60years and above
4 Occupation 1 = Civil servant
2 = Business man/woman
3 = Others specify
5 Education level 1= O-Level
2= A-Level
3=Diploma/certificate
4=Bachelors’ degrees
5=Masters and above
6=Others (Please
specify)……………………………………………….
……………………………………………………….
……………………………………………………….

54
SECTION B: DEGREE OF LIFE INSURANCE UPTAKE IN UGANDA.

Measure of life insurance uptake

No. Question construct Reaction Tick
7 Do you have insurance 1 = Yes, (go to qn 10)
cover? Which policy type?
(a) Life insurance
(b) General insurance
(c) Both
8 Which insurance firm (a) Sanlam
did you purchase your (b) UAP
insurance cover from? (c) Britam
(d) Others (please specify)……………………..
………………………………..…………………
9 If you do not have life 2 = Yes I need to buy one if I can manage
insurance, do you wish (go to 10)
to buy one? 3 = No and I don’t need it (go to 11)

Explanation
Use a scale of 1 – 5 where 1 = Strongly Disagree, 2 = Disagree, 3 = Neutral, 4 = Agree, 5 =
Strongly Agree, to answer questions 10 and 11.
10. Indicate whether you agree or disagree with regard to reasons for buying
life insurance
I bought/wish to buy life insurance because; 5 4 3 2 1
Life insurance is a form of emergency
Life insurance is a form of investment
Life insurance improves on welfare
Life insurance is a form of security for unforeseen uncertainties
Others (please specify)…………………………………………………………….
…………………………………………………………………………………….
……………………………………………………………………………………

11. Reasons for not buying life insurance;

I never bought/ I don’t wish to buy life insurance because 5 4 3 2 1
Life insurance is a wastage of money in case you don’t fall sick
life insurance products are not affordable to me
Most insurance companies that provide life insurance are not trust worthy

Others (please specify)…………………………………………………………….

…………………………………………………………………………………….
……………………………………………………………………………………

55
SECTION C: ATTRIBUTES OF CONSUMER ATTITUDES THAT AFFECTS THE
UPTAKE OF LIFE INSURANCE

Explanation
Use a scale of 1 – 5 where 1 = Not at all, 2 = to a low extent, 3 = to a moderate extent, 4 = to a
large extent, 5 = to a very large extent, to answer questions 12 and 13
12 To what extent do the following factors affect your uptake of life 5 4 3 2 1
insurance?
Low levels of awareness to the public on life insurance products and benefits
Product packaging with various benefits are not suitable for all groups
Low professionalism in companies by sales persons
There is bad image and reputation of insurance companies in life cover
provision towards the public
Poor customer service among the life cover providers
Sophisticated technology has made policy covers to be un-trusted
Poor distribution channels
Unfavorable government regulatory changes i.e. increase in tax on policy
covers
Shortage in life insurance provision outlets (they have many centralized
offices mostly based in big towns)
Low consolidation and Merger by insurance companies to ease the services
Complicated policy documentation by insurance companies
Others (please specify)
……………………………..………………….……………………………….
….…………………………..………..……………………………………….

SECTION D: SOCIO-ECONOMIC FACTORS LIMITING THE UPTAKE OF LIFE

INSURANCE COVER IN UGANDA
13 To what extent do the following socio-economic factors affect your uptake 5 4 3 2 1
of life insurance?
Life insurance is not affordable to all social classes
Life insurance is not suitable for poor people because of low income
It is not suitable or a preference to the unemployed/poor
Life insurance is mainly designed for the most educated individuals
Difference in social security savings can affect its uptake
Life insurance is affected by occupation type (I.e. good for those working in
risky jobs)
Others (please specify)
……………………………..………………….………………………………
…….…………………………..………..……………………………………

56
12) Any other comment?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Thank you very much for your participation

57