How Financial Education Influences the Perception of Life Insurance

Understanding that we are solely responsible for our own financial protection, we cannot overlook the benefits of life insurance.

We all know that we receive the first financial education lessons from our parents or grandparents, who explain to us, since childhood, how important the money we keep under the mattress is, especially when they don’t give us money out of the house. We also know, among other things, that it is important not to throw money out the window, that certain things (or people) sometimes don’t even make two bucks, and that it’s important to always have pocket money. 

Finally, we also know that our own palms are the best financial advisors we can rely on. Not the other way around, but it constantly gives us financial information about our own budget: if our left palm eats us, we take money; if he eats our right palm, we give.

Romanian Financial Education

In other words, financial management is an area in which we step from childhood. But, most of the time, we stop, with or without our will, at this level. And this, for a long time, because we only receive the first real lessons of financial education high school, a few years away, in economics classes. In these conditions, it is not surprising that Romania ranks last in the EU in terms of financial education. 

But it is not the shame of the last place in this ranking that is the most pressing, nor the fact that less than 4% of the Romanians participating in a financial study * managed to answer correctly three simple questions about personal finances. Something else is more frustrating.

Specifically, precarious financial education prevents Romanians from obtaining more information about certain extremely important areas not only for their present, but also for the future. And the insurance industry is certainly an area that Romanians should deepen. 

Unlike Europeans, most Romanians limit themselves to compulsory policies, be they RCA (motor third party liability insurance) and/or PAD (compulsory home insurance), ignoring other insurance products that could offer them a future. more stable. And life insurance is, paradoxically, in this category, that of rather ignored policies. Life is the most precious asset, but, nevertheless, Romanians usually choose, except for compulsory insurance, the policies that insure them for everything else, except life.

Life Insurance, Another Start in Romania

Thus, at present, life insurance has, in Romania, a share of approximately 20% of the total insurance market. Moreover, according to a study conducted by an insurance company, a Romanian invests, on average, less than 20 euros per year in a life policy, an average 60 times lower than the European one. 

Indeed, life policies are still a relatively new product for Romania, so, to some extent, it is understandable why Romanians are reluctant to look at this type of insurance. Knowing a little bit about a road at all, not many people choose that path. Here, financial education intervenes, which can draw a map for everyone to understand, a map that can point the way to a better future, a road that involves small but safe steps.

Life insurance is not a simple product that covers risks such as illness, disability, surgery, death, etc. It is, in fact, the financial protection of a person and / or his family. Responding to much more complex needs, such a policy is accessible in several forms: classic life insurance, life insurance with savings plan, life insurance with capital accumulation, life insurance with investment component, etc. 

In addition, a life policy can be customized periodically to accommodate ever-changing needs. Understanding that we are solely responsible for our own financial protection, we cannot overlook the benefits of life insurance. And financial education plays a crucial role in this understanding process.