Many people often associate financial security with earning and spending wisely, neglecting the importance of preparing for life’s uncertainties.
The role of insurance in this preparation, as well as in optimizing savings and investment, should not be downplayed. A solid financial strategy must provide stability while offering a cushion to navigate unforeseen circumstances.
Insurance is essential in achieving this, protecting individuals and families from financial shocks and supporting long-term financial wellbeing. Global trends show a growing shift toward personal finance management, with more people seeking professional advice to secure their future.
In Uganda, however, financial literacy remains low, and many individuals lack structured long-term financial plans. According to the recent FinScope Uganda Survey, over 70 % of Ugandans do not have concrete long-term financial plans, and only 11 % are satisfied with their financial situation.
Moreover, 60 % lack confidence in their preparedness for old age. A significant portion of the population operates on a personal budget deficit, where income fails to cover expenses.
This lack of financial planning often leads people to rely on borrowing or family support to manage unexpected costs. Without a structured approach to savings, investment and risk management, such as insurance, the individuals remain vulnerable to economic shocks.
Many Ugandans view insurance mainly as a tool for risk mitigation, such as protecting against accidents, illness, or death. However, insurance also offers significant benefits in terms of saving, investing, and securing long-term financial stability.
A well-rounded financial strategy should incorporate insurance to ensure that dependants are financially protected in case of unexpected events. For instance, life insurance not only offers a safety net for beneficiaries after the policyholder’s death, but it often includes an investment component that allows policyholders to grow their funds.
Modern policies like endowment and whole-life insurance accumulate cash value over time, giving individuals access to funds for major life goals like buying a home or funding children’s education. Insurance also serves a broader role in enhancing financial security.
In many countries, premiums paid for life and health insurance are tax-deductible, providing immediate financial relief. If Uganda were to introduce similar incentives, it could boost insurance uptake, helping more people secure their financial future while reducing their tax burdens.
Furthermore, relying solely on the National Social Security Fund (NSSF) for retirement planning is risky. Diversification is key to sound financial planning, and individuals should explore options beyond mandatory NSSF contributions. For example, products like Jubilee Life’s Income Drawdown Policy allow individuals to manage retirement funds more effectively, providing stable income while enabling remaining funds to grow.
Additionally, supplementary insurance-based retirement plans offer flexibility by allowing individuals to contribute over time, ensuring financial independence during retirement without relying solely on government pensions or family support.
Starting financial planning early is essential. Young professionals should consider small insurance or pension policies to begin saving and investing early in their careers, adjusting as their income grows.
Insurance provides a protective layer that shields investments, allowing them to grow without the need for premature liquidation due to unforeseen events. In conclusion, insurance should be a core component of every individual’s financial strategy, offering not just protection but also opportunities for savings, investment, and long-term financial stability.
The author is the chief executive officer Jubilee Life Uganda
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