This is a blog post by Ogodogun Esther... Policy holders are advised to read the documents issued and make correct inquiries about the policies they purchase.
So, here we are. Let's start with the misconceptions.
There are different misconceptions about insurance, e.g. God is my insurance, insurance is expensive, insurance only 'pays out at death', insurance companies do not pay claims, I do not need insurance, etc.
We will discuss the commonest insurance misconceptions.
This is a major misconception that has hindered many from enjoying the protection and benefits insurance provides. There are various insurance policies that can be purchased to get profit. They are called Investment Linked Policies. Policy holders get returns for their investments. Policy holders do not have to die to get paid.
Claims are paid to policy holders who have suffered loss as a result of untimely death,or property through accident, fire, burglary, etc. Claims are paid on policies that have met the terms and conditions stated at the beginning of the policies.
In Nigeria, there are governing bodies (e.g. NAICOM) that ensure effective administration, supervision and regulation of insurance companies. They also ensure claims are paid.
The major reason for non-payment of claim is wrong information. Little or no information about a policy will lead to premature termination of the policy which affects claims.
Policy holders are advised to read the documents/contracts issued and make correct inquiries about the policies they purchase.
We are exposed to different risks on a daily basis - accident, loss of property, fire, job loss, business collapse etc. We cannot prevent some of these risks, but having the right insurance policy will help cushion the discomfort that would arise from these losses. For instance, a motor insurance will greatly reduce the discomfort experienced if an accident occurs.
Also, imagine having money saved up in an investment linked insurance policy and there is job loss, it brings a certain level of peace. You will agree now that we all need insurance.
Next, we shall examine some of the benefits that can be gotten from getting an insurance policy.
We all want the good things of life. Life insurance can act as a long term investment plan. Long term investments such as savings for the future education of your children/wards, planning your retirement, buying your dream house and short term investments such as getting married, paying your rent, going on vacation, buying a car and even paying yourself can all be achieved with an investment linked insurance policy.
Whatever is paid on life insurance (premium) is not taxable, so are the claims paid to policy holders. In clear terms, you get a relief on whatever (premium) you are paying on life insurance. Workers who pay high tax rates can get relief and rebate on their tax with life insurance.
Salary earners and business owners are statutorily entitled to tax relief if they take on a life insurance policy. This can be seen in sections of the Personal Income Tax law and the 2004 Pension Reform Act.
It's a way of encouraging people to get life insurance.
Having an insurance policy can help salary earners and business owners cultivate a regular and strict savings culture.
Saving is a difficult task, we have different challenges, and most times, money meant to be saved is diverted to cater for these challenges, and our goals can't be achieved.
Impulse buying can be curbed with an insurance policy. Long and short term savings can be achieved with a life insurance plan.
Remember, Life without Insurance is better imagined than experienced. Get insured today.
Next week, we will continue with other benefits of insurance.
Ogodogun Esther is a writer/blogger. She works with Mutual Benefits Life Assurance Limited and has a passion for writing and counselling. She can be reached at firstname.lastname@example.org