CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

 The role played by insurance institutions in a post-modern economy cannot be over emphasized. The insurance firms as financial intermediaries play a significant role within a nation’s financial system by mobilizing funds from the surplus economic unit and channeling it to the deficit investment unit of the economy. An aspect of the insurance business is the life insurance (Sulaiman, Migiro and Yeshihareg, 2015).

 Life insurance plays an important role in an individual’s personal financial plan, as suggested by most personal finance and financial planning books. Life insurance helps individuals save money while protecting against personal risks in life. However, research work on life insurance show that life insurance density and penetration is one of the lowest in Africa despite our demography. This phenomenon is evident in a report by the Swiss Re Sigma for the year 2013 which reveals that Nigeria being the most populous and richest in the continent is having just 0.69% insurance penetration ratios – implying that the majority of the population are still vulnerable to life’s risks that may permanently strip away their future earnings (Asinobi and Ojo, 2014).

Life insurance is a policy that replaces a lost stream of income that results from the death of an individual (Todd, 2004). Life insurance is undertaken to provide protection to the insured's family, creditors, or others against the loss of earning capability of the insured in the event of his death or serious injury. According to Oke et al (2010) life insurance is a protection of an economic value of an asset.

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