By Jolly Kabahuma Olweny
Africa-Press – Uganda. In the world of financial well-being, saving money is not merely a habit, it is a lifestyle that can redefine your future. Saving is fundamental for investment, wards off life’s uncertainties and paves a secure path through obstacles. Yet in Uganda, the savings status quo is concerning. The 2020 Financial Capability Survey revealed Uganda’s savings-to-Gross Domestic Product (GDP) ratio is at 13.48%, trailing behind Kenya’s 23% and Rwanda’s 18%, a wakeup call, urging us to rethink our financial strategies.
Furthermore, according to the 2018 Finscope survey by Financial Sector Deepening Uganda (FSDU), even after saving most people access their emergency funds for common expenses such as funeral costs, medical expenses and school fees. The report further shows how people manage financial risks when faced with unexpected expenses stating that 22% and 30% of adults use their own savings or borrow money respectively.
While generally known to be a measure to cushion oneself against unforeseen future misfortunes, the insurance sector has over time shade its skin revealing its multifaceted offerings including mitigating financial risks.
It is important to recognize that if you do not plan your finances and fail to protect your loved ones from the troubles of life, life’s journey can be hard to walk. It is therefore of utmost importance for one to invest their monies in the right avenues to provide a security net. In Uganda, life assurance and medical insurance are witnessing steady growth as more people recognize the necessity of insurance.
The core purpose of life assurance cover savings is to help people to plan and meet their life aspirations. One is encouraged to save for long periods ranging between 5-10 years. There are several life assurance products that provide a protective shield for your loved ones and are also savings tools. With life assurance’s ability to provide financial security in times of need and accumulate a cash value over time, it can play a crucial role in a long-term savings strategy. The products include endowment plans that can cater for child education or attaining a savings goal for any dream such as purchasing land, starting a business, or preparing for marriage.
Additionally, medical insurance is also another way to support the population to reduce the burden of catastrophic expenditures on health. According to the World Bank’s Uganda Human Capital Index for 2020, 15% of Uganda’s population incurs catastrophic health expenditure measured as out-of-pocket spending, which exceeds 10% of household consumption or income.
Majority of the population relies on cash payments from savings, the sale of property or crowdfunding to cover unexpected health emergencies, medical insurance mitigates this by giving access to medical care and ensuring saving are protected.
31st October is marked as World Savings Day, a day to celebrate financial wellness and the necessity of saving for the future. In view of these statistics, perhaps the message to Ugandans as we recognize this day, should shift from urging them to save but rather expose them to better options with the inbuilt combination of savings and insurance that has the potential to better their financial wellness.
Coupled with the supervisory role of the Insurance Regulatory Authority over the insurance sector players, formal insurance not only guarantees high returns but also offers better ways to mitigate risks.
Source: Nile Post
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