Insurance is a financial risk management tool in which the insured transfers a risk of potential financial loss to the insurance company that mitigates it in exchange for monetary compensation known as the premium.
On the other flip of the coin, Insurance policies are contracts between the policyholder and the insurance company, are of different types depending on the risk they mitigate.
Broad categories include life, health, motor, travel, home, rural, commercial and business insurance.
Hard times demand sophisticated approach and topnotch management skills, hence every Nigerians combating the duo challenge of scarcity and economic holocaust must learn to protect and manage what is currently at his/her disposal.
This can be achieve by taking advantage of various insurance policies available a number of which Techeconomy has help you to enumerate them:
1. Life Insurance
Life insurance is a contract between an insurance company and a policy owner in which the insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured person dies in exchange for premiums the policyholder pays during their lifetime.
The best life insurance companies have good financial strength, a low number of customer complaints, high customer satisfaction, several policy types, available and included riders, and easy applications.
Many different types of life insurance are available to meet all sorts of needs and preferences.
Depending on the short- or long-term needs of the person to be insured, the major choice of whether to select temporary or permanent life insurance is important to consider.
Term life insurance is designed to last a certain number of years, then end. You choose the term when you take out the policy. Common terms are 10, 20, or 30 years. The best term life insurance policies balance affordability with long-term financial strength.
Decreasing term life insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate.
Convertible term life insurance allows policyholders to convert a term policy to permanent insurance.
While renewable term life insurance provides a quote for the year the policy is purchased.
Premiums increase annually and are usually the least expensive term insurance in the beginning. Again, many term life insurance policies allow you to renew the contract on an annual basis once the term is up.
This is one way to extend your life insurance coverage, but since the renewal premiums are based on your current age, they can rise steeply each year.
A better solution for permanent coverage is to convert your term life insurance policy into a permanent policy.
According to the National Insurance Commission (NAICOM), there are 58 life insurance companies in Nigeria.
In 2022, the value of gross life insurance premiums written in Nigeria exceeded 600 million euros for the first time. In that year, life insurance premiums amounted to 677.3 million euros in Nigeria, up from 545.2 million euros in the previous year.
Although there are several stereotypes revolving around life insurance in Nigeria, some believe Nigerians cannot be held responsible or blamed for having trust issues when it comes to payouts.
They are more or less used to getting hoodwinked in these kinds of situations. Hence, they have naturally grown a resistance to trusting organizations that make promises to pay claims whether legally binding or not
Nonetheless, Nigerians must know that this is a myth, an untrue tale peddled as facts. But on the contrary, each year life insurance companies pay billions of naira in claims to Nigerians via various insurance policies. So I believe that life insurance is very expensive.
2. Health Insurance
According to experts, a health insurance policy must be a part of your financial planning and it should be purchased early when you are young and responsible to stay safe and secure.
Investing in a health insurance plan at an early age also provides other numerous advantages such as better sum insurance coverage, lower premium rates, no medical tests, and so on.
Healthcare expenses are increasing at a rate higher than medical inflation, and that is why it’s a must for everyone to have health insurance coverage which not only helps you to save your emergency funds and save of a lifetime, in case any medical emergency occurs to you or your near and dear ones, but also supports you to deal with rising medical costs.
Typically, the cost of a health insurance plan in Nigeria for either parents or their children is around ₦9,000 for an individual.
For private medical care services, the singular health insurance plan fee starts from ₦35,000 to ₦220,000, and family plans range from ₦125,000 to ₦650,000.
Vital Contributors Social Health Insurance Program (VCSHIP) costs an enrollment expense of ₦15,000 and ₦10,000 per head while the National Mobile Health Insurance Program (NMHIP) costs ₦12,000 and ₦9,000 per head.
However, Health insurance has barely scratched the surface in Nigeria with regards to percentage coverage of the population. 97% of Nigeria’s population is not covered by any kind of health insurance.
The three percent (3%) of the population who have health insurance are provided for by employee health coverage.
Unsurprisingly, of the three percent of Nigerians with health insurance, men have more insurance coverage than women as 56.7% of those covered are male as against 43.3% of the women.
It is also important to note that access to affordable health care remains out of reach for most Nigerians especially those without formal employment.
Despite introducing various health insurance programs, the National Health Insurance Scheme (NHIS) has failed to capture those out of the employment cycle.
The cumulative coverage rate of these other programs was less than one percent of those covered by health insurance.
3. Motor Insurance
Vehicle insurance covers cars, trucks, motorbikes, and other types of road vehicles. It is often referred to as auto insurance, motor insurance, or car insurance.
Its main purpose is to offer financial protection against bodily harm or physical damage sustained in auto accidents, as well as against any responsibility resulting from such situations.
In addition to providing financial protection against theft, vehicle insurance may also cover damage to the vehicle resulting from non-traffic-related incidents including keying, weather-related or natural disasters, and collisions with stationary objects.
The exact conditions of auto insurance differ depending on local laws in every area.
It is important to note that several myths revolve around motor insurance in Nigeria some people believe that Car Insurance is more expensive for young people.
This is one of the most common car insurance myths. The general idea behind this myth is that young people are more likely to be involved in accidents, so their premiums will be higher to account for this risk.
While this idea may be true, car insurance companies also use different criteria when determining rates for other age groups. The veracity of this, whether scientific or otherwise, has not been validated.
While it may seem natural to assume that cars with lower accident rates will have lower insurance rates, this is not always the case. Many insurance companies use the total cost of the car to determine the rate.
You will likely be charged more for your insurance policy if you have a more expensive vehicle. However, there are a few exceptions to this rule.
If you have a car that is particularly difficult to repair, you may be charged more for your insurance policy. There are also numerous others to mention.
Data sourced from the Federal Roads Safety Corps (FRSC) and the Nigerian Insurers Association (NIA) revealed that there are 12 million vehicles plying roads across the country of which only a 3.11million were insured as of the end of 2023, indicating only 25 percent of vehicles are currently insured. It is important to note that out of 15,507,000 registered vehicles in West Africa, Nigeria accounts for 11,869,800 vehicles or 75 percent, “indicative” of the market size for automotive products supply especially for repairs/replacement.
Techeconomy investigations show that motor insurance premiums went up by 76.9 percent Year-on-Year, YoY, in the first half of 2023, H1 ’23, to N57.3 billion from N32.4 billion recorded in H1’22.
Accordingly, the insurers reported a 66.2 percent increase in motor insurance income to N32.9 billion in the first quarter of 2023, Q1’23, from N19.8 billion recorded in Q1’22.
It is important to note that NAICOM, also raised claims for motorists to N3 million from N1 million in the event of an accident.
According to the National Bureau of Statistics (NBS), a total of 2,717 road accidents were recorded in Q4 2023, showing an increase of 24.23 percent from Q3 2023, which saw 2,187 car crashes. “However, on a year-on-year basis, traffic accidents decreased by 33.12 percent from 3,617 recorded in Q4 of 2022.
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