Willingness and Ability to Pay for Funeral Insurance among Formal Workers in Ghana.

Abstract

This study examined the willingness and ability to pay for funeral insurance among formal workers in Ghana. The objective of the study was to evaluate Ghanaian willingness to pay for funeral insurance in Ghana, to determine ability to pay for funeral insurance in Ghana, to examine perception of Ghanaians on funeral insurance. The study employed a simple random sampling technique in selection of the sample of respondents. The study was cross sectional conducted on 378 respondents in five municipalities in Ashanti Region of Ghana. This study used a structured questionnaire in the collection of primary data from the targeted respondents, frequency analysis, percentages, standard deviation, tables, and chart in the analysis of the set objectives. The probit regression model was used to estimate the determinant of willingness to pay, and contingent valuation was used to elicit the willingness and ability to pay for the household head, and other members of the household using the bidding game technique. Descriptive analysis shows that Females were the majority with 51.74%, whereas the remaining were males with 41.29%. Married respondents recorded the highest with 45.31%, whilst persons that were divorced recorded the lowest with 5.09%. For religion most of these respondents were Christians recording 61.93% and most of them were educated up to the tertiary level with 65.15%. Lack of trust in the insurance companies recorded the highest of 31.53% as the reason respondents were not willing to join the funeral insurance scheme. Analysis of data of the study showed that Muslims recorded reduced odds of joining a funeral insurance as compared to Christians and this was significant, but the rest of the religious groups were not statistically significant.For the number of persons in a household there was increase in odds of joining a funeral insurance for households with 5-9 members compared with households with 1-4 members. But households with members 10 and above recorded an increase in odds of joining a funeral insurance. The study revealed that the first most significant constraint face by the respondent’s willingness and ability to pay for the funeral insurance was lack of trust in the insurance companies, and the least ranked constraint was identified as contributing money in advance for a funeral is seen as taboo in some households and for that reason the respondents do not need funeral insurance. The study concludes that the majority of the respondents were willing to join funeral insurance and would pay an average amount of GHS 70.69, and most responded that their reason for joining a funeral insurance is because they want to help their relatives. The study recommends that Funeral insurance companies should design their policies according to the income of individuals and the average cost should be around 70 Ghana cedis or less per month for formal workers in Ghana.