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Insurance in Nigeria: Everything You Need to Know

27/03/202410 minute read
Insurance In Nigeria - Everything You Need To Know

Apart from selecting insurance as a major, it is very much applicable in today’s world. Inasmuch as general knowledge keeps getting revised, including the vocabulary used daily, there are hidden things you will need to know about insurance in Nigeria.

Insurance is a protective barricade against the impact of any emergencies that can happen to you. You do not wish for any damage to your life, but insurance says, ” Don’t wait till there’s a fire before you think of quenching it.”

Keep reading to gain comprehensive knowledge about navigating the insurance landscape in Nigeria. Are there any benefits or downsides to it? What does it really entail for an average person and a business tycoon? And what does no one really say about it to others?

What Is Insurance?

Insurance is any legal contract or agreement that is made between an individual and the insurance company, where the latter (insurance company) agrees to cover financial expenses against specific losses that may be incurred by the individual, given certain conditions.

  • What this means is that instead of allowing the cost of your house to get on fire, for example, to disturb the money in your bank, you would only call your insurance company, and they would neatly fix it for you.

You wouldn’t need to feel an inch of the cost; your finances would have been protected from the rage of crumbling through the benefits of insurance.

What more can insurance offer?

Why Is Insurance Important?

  • Financial Protection Against Losses

I am quite sure you’ve heard tragic stories about people who went into debt because of a sickness or the death of a family member. The expenses tore their finances apart.

Maybe they didn’t know what you know about insurance or just ignored it like a neighbor’s crying toddler. However, the result was not so pleasant.

Paying attention to Insurance in Nigeria helps you take your finances to a safe haven when disaster strikes. It assures you of the safety of losing more than you have already lost. So, knowing about insurance plans and getting them early enough to safeguard your finances is important.

  • Equitable Distribution of Wealth

Have you heard about the retirement age in Nigeria? (60-65 years) You’ve probably calculated it to be many years away from your current age. Surprise! It’s still on its way.

What plans do you have for wealth to be evenly distributed throughout your life? When you are out of your youthful vibrancy, money will still be an essential need. As a person living in Nigeria, you need to get insurance to prevent the embarrassment of utter dependency.

A kind of insurance called life insurance can offer retired people a pension plan that runs consistently for the rest of their lives. Such income can be used to manage their needs without the stress of working until there’s nothing left.

  • Insurance Boosts the Economy of Your Business

Those who form the workforce of your business enterprise are humans just like you. Exception of the latest trend of robots replacing humans, your workforce needs the assurance that any risk in the company does not affect them.

They need to know about the insurance plans that your company has for them and this confidence will boost their productivity levels, a direct shot in the economy of the business.

Who wants to work in a place they are not cared for? The hazards of some business enterprises scare qualified hands leaving the establishment to yield little. Make a call to an insurance company to save the day.

  • Easy Access to Loans

In Nigeria, apart from collaterals, banks, and other financial companies would give more attention to your business enterprise if it is secured in insurance.

They want to know how much you care about your organization, which increases your finances, before trusting you with a portion of theirs for a period of time.

So you see, insurance in Nigeria is that golden protective barricade everyone hopes on, especially as a business owner.

  • Improves Foreign Trading
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Business icons who took the bold step of trading between countries are eating a larger piece of cake than those in a specific city. Insurance occurred to them, and they grew above their fears by using it. And guess what? Foreign trading is not a taboo in Nigeria.

You need to know about insurance because the right investments are calling your skills and intellect in the global market. Although it is accompanied by some risk factors like transportation issues, damaged goods, and dishonest partners, insurance covers them.

Foreign trading will open you up to new opportunities, investments, better profit, and also improve the economy of your country(Nigeria) and business.

  • Insurance is a Profitable Venture

It is good to know about insurance as a profitable venture, especially as a business owner in Nigeria. Both the customer and the insurance company benefit from the business of insurance.

To you as a customer, your emergencies are covered, and your finances are preserved. To the insurance company, the news keeps getting out, more people keep patronizing the business and it makes significant progress in its growth.

How, then, does this ultimate lifesaver work?

There are different types of insurance policies offered by insurance companies. Each company has its own policy, so it is advisable that you carefully read through the policy before signing on to it.

Types of Insurance in Nigeria

Since you really need to know about insurance, it is important to break down the different types available to protect you. The choice of what type to choose solely lies in how important a policy is to your future and your current financial status as a Nigerian living in Nigeria.

  • Life Insurance

This insurance policy states that the insurance company should pay an agreed amount of money to your beneficiaries (those who you have put to benefit from the payout of the insurance policy).

In this case, the beneficiaries may include: your spouse, children and siblings. Those who you love and wouldn’t want to leave them behind without any care. This insurance can help them for sometime before they are able to stand financially on their own in your demise.

Some life insurance policies include:

  • Term life insurance which is guaranteed for a specific period, such as 15-30 years.
  • Permanent life insurance that covers for a lifetime.
  • Endowment life insurance.
  • Money-back plans.
  • Savings plans.
  • Child education plans.
  • Unit Linked Insurance Plans (ULIPs).
  • Health Insurance

Health is wealth and wealth should protect your health in your best interest. Your health is your human engine. So, securing it is the second most important thing you should do after your life.

Health insurance covers the costs of serious medical emergencies. It provides financial aid to you if something seriously bad happens to your health. In Nigeria, you can get health insurance for your pregnant wife or toddlers who are likely to need medical care.

Those with chronic illnesses would need to know about insurance for the purpose of saving huge amounts of money on expensive drugs and treatments. Good health should be your priority by using health insurance.

  • Travel Insurance

Travel insurance often feels like calling Mom or Dad to save the day. In an easy illustration, say you traveled to Europe and you took two boxes and a backpack along.

On arrival, you mistakenly rushed out without getting the backpack that contained your laptop and important credentials for the essence of your trip. You don’t know who to call to redeem you, because you’re in a strange land.

Your insurance company is always helpful in covering such loss as long as you have chosen the travel insurance policy. It also covers transportation issues, missed flights, and natural disasters at your destination.

  • Vehicle Insurance

This is a very popular type of insurance. You’ve probably heard your elder sibling get his. This is what it’s about. Imagine you finally got your dream car and you know how cute it looks because it has a crowd of admirers…

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You’ve had the feeling that that car is not safe in the neighborhood or even while driving. So because you spent a fortune on it, you just want to secure it from any “man-made” or natural harm. This right here leads you to an insurance company to get vehicle insurance.

  • Home Insurance

This one is really interesting. Home insurance would keep you from sleeping on your friend’s couch after years of owning your own home which just caught fire (among the other things that could happen to it).

It provides financial assistance during unfortunate events in your home, like the seven-year-old who just turned on the cooker and set the house on fire, a burglary incident, flooding, earthquakes, and so on.

Now you know about insurance and its types, let’s know what makes up this policy. You can walk into the supermarket and get a box of chocolate, but that doesn’t work with insurance companies. So here are the vital components of an insurance policy in Nigeria.

Components of an Insurance Policy Types

  • Premium

When an insurance company sees you are considering its services in any of the policies or plans that it offers, it clearly states the terms and conditions for you. One of them is the amount you are supposed to pay to receive the benefits of the company.

This amount is called Premium. It varies depending on the insurance policy that you choose and certain criteria are used to set up the premium. They include;

  • Vehicle Insurance Policy: The history of your car(whether it’s in good state), your age, location and some documented claims of the car being yours.
  • Health Insurance Policy: Health Status and history, age, gender, and various degrees of coverage (depending on the overall responsibility of the company for your health).
  • Home Insurance Policy: Worthiness of your home, location, degree of coverage (depending on the type of disaster that can affect your home), occupation, and valuables.

If you are getting more than one plan from a single insurance company, it is wise to negotiate for a discount on the additional one.

  • Policy Limit

This refers to the highest amount of financial assistance that an insurance company can offer for an insurance plan. Before paying a premium, it is important to examine the policy limits of several other companies in order to get the best deal for you and your future. In a country like Nigeria, there are reliable options to always choose from.

  • Deductibles

This is when the insurance company tries to bet on you for its own services. It is an amount you have to pay to get them working when uncertainty strikes.

However, insurance companies need to keep their business running. Insurance in Nigeria is not a form of charity. It has been criticized in so many ways, but despite that, it still proves helpful over a number of decades.

The Problems with the Insurance Industry in Nigeria

  • It has other underlying terms and conditions specific to each insurance company.
  • Criminals could post as professionals to scam people.
  • Insurance only has restricted offers.
  • The business aspect of insurance often overrides their services.
  • It can be a bit pricey or expensive.
  • Costs may be increased more than what is advertised or marketed.

The Bottom Line

The subject of insurance in Nigeria should be viewed from a balanced perspective, ignoring the vital things that individuals should consider.

The marketers in these companies shouldn’t use their services as bait to attract customers but should also try to break down, in simple terms, part and parcel of the policies they offer.

This will help you understand and create a better plan for your future, family, workers, health, home, vehicle, and loved ones. Remember, the future is now.

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