Chief Executive Director R. Renganathan

Life Insurance Leader Ceylinco Life has adopted a new cause retirment planning in a mont-long activity-filled campaign similar to its successful Life Insurance Week initiative in February. Here, the company’s Chief Executive Director R. Renganathan elaborates on this new effort.

Excerpts:

Q: Ceylinco Life recently announced plans to conduct a Retirement Planning Month in Sri Lanka. What prompted this decision?

A: It is a well-known fact that Sri Lanka’s population is ageing. What is meant by this is that the percentage of older people in the population is increasing. This is the result of better healthcare and improved living conditions as well as the success of birth control programmes. The overall rate of growth of the population has slowed, so naturally, older people begin to make up a larger segment of the population. This is a natural phenomenon, but one that Sri Lanka is not well geared to face. The vast majority of people are employed in the private sector and the informal sector, where there is virtually no safety net for them after retirement. Sri Lanka does not have a comprehensive state-run programme to care for elders either. This makes it imperative that people should start saving for their retirement while they are gainfully employed. The Retirement Planning Month is intended to create awareness about this aspect and to promote retirement planning in the target market.

Q: Why is a life insurance company promoting retirement planning?

A: Life insurance and retirement planning are closely linked, and most life insurance companies develop investment products that provide for retirement. In both life insurance and retirement planning, the principal concept is making provision for the future of oneself and one’s family. In life insurance, a policyholder seeks to ensure that his or her family would be provided for in the event of an untimely death or disability. When the policy matures, the policyholder receives a lump sum which comes in usually close to his or her retirement age. Similarly, a retirement plan is one that enables a person to start saving, with the assistance of a professional financial services company, for a future when he or she will cease to earn, or have a diminished earning capacity.

Q: Why have you selected the mechanism of a Retirement Planning Month to promote retirement planning?

A: The idea came from the success of our Life Insurance Week which was conducted in February this year. Life insurance has been in Sri Lanka for several decades and is a very competitive area of business. Despite this, the penetration of life insurance is still under 10 per cent. In the past and even now, each insurance company promotes its own products, using their respective features, and the stability and strength of their companies to persuade potential customers to buy life insurance. There is nothing wrong with this approach, but one result of it is that life insurance remains a seller’s market. There is inadequate understanding about the need for life insurance. Buying decisions are made based on product features. This makes insurance just another product, which it is not. It is an essential safety net against an uncertain future, and if this is understood, we believe that penetration will increase and the category will grow.

When we evaluated the results of the activities conducted during the Life Insurance Week, we were pleased to see that our decision to go back to fundamentals and promote life insurance in its generic form had yielded very impressive results. Therefore, it was decided to apply the learning of this initiative to promote retirement planning in a similar way.

Q: Do you think the potential for retirement planning is as high as the potential for life insurance?

A: I don’t see why not. In life insurance, the policyholder has to contemplate the possibility of an unforeseen eventuality in which he or she will not be able to provide for family and loved ones. Thankfully, this is the exception and not the rule. But we all know that we cannot stop ageing and that one day, each of us has to retire. The need to plan for this stage of our lives is obvious.

The size of the target segment is also very large. Do you know that by 2031, just 23 years from now, 22 per cent of this country’s population would be over 60 years old? We don’t even need to go that far. By 2021, that is in another 13 years, there will be more than four million people aged over 60 in Sri Lanka. Clearly, it is time that people who will be in this segment start planning their retirement now, before it is too late. So, the need for retirement planning is very real and urgent, and the target audience is very large.

Q: What does the Retirement Planning Month comprise of?