See the 5 importance of insurance in Nigeria and why you need it now. I also included 5 tips for those who needs insurance in Nigeria.
Nigeria is one of the few countries in the world that is somewhat reluctant to embrace insurance. We see insurance as an unnecessary expense, which we can well do without. The average Nigerian is prepared to repair any damage to his vehicle and avoid the ‘hassle’ of purchasing an insurance policy.
I spent many years of my life working in the Insurance industry and during that time one recurring question that kept popping up while marketing insurance was ‘why the need for insurance, isn’t it a waste of money and time? A lot of people don’t know that they can actually save money when they take up an insurance policy! Yes you heard me right, I said save! If you have ever asked yourself this question, then this article is for you. Read on to find out more.
In simple terms, Insurance is a contract/agreement between the proposer (Insured) and an insurance company (Insurer), in which the Insurer agrees to compensate the Insured (for a token fee known as premium), in the event of loss, damage, death or injury to them, their property or that of a third party.
One thing you need to know from the get-go, is that insurance is not a tangible service, it is intangible. In other words it is not physical or seen. Because insurance is an intangible service, it is regarded by some as one of the most difficult things to sell. The only time insurance becomes ‘visible’ is in the event of a loss, in which case a claim is initiated by the policyholder and it is assume that the terms of the insurance contract are upheld by the insurer.
Because insurance is intangible, some people are reluctant to purchase it. But insurance plays a major financial role which cannot be over emphasised. Hence it is very important that you have at least one insurance policy to protect you against an unforeseen loss.
So, having that in mind, here are 5 major reasons why you should purchase an insurance policy.
At the beginning of this article I did mention to that when you purchase an insurance policy, you end up saving money. I’m sure your thinking ‘how am I saving money when in actual fact I’m spending it by buying an insurance cover.’ The answer is simple, when you purchase an insurance policy, you are purchasing it for a small fee (premium), compared to the extent of risk the insurers are taking on your behalf.
Let me explain by a simple example. If you decide to insurer your brand new car for N3million, the standard premium rate is 10%, therefore your premium will be N300,000. If due to unforeseen circumstances the vehicle is stolen, your insurers are obliged to pay the sum N3million, less the applicable policy deductible of 10%.
Hence the likely final settlement will be N2.7million. So, for your premium of N300,000 you have saved N2.7million. After all, if you had not insured the vehicle, you would have borne the cost of replacing it with your own finances. Insurance transfers the financial responsibility from you to your insurer. Now that’s what I call saving money!
Having an insurance policy guarantees that the unforeseen loss associated with a risk is transferred from you the insured/policy holder to your insurer. In simple terms, once you have taken up an insurance policy, you are inadvertently shifting the risk of a loss occurring from you to your insurer. This will give you peace of mind and the assurance that in the event of a loss you will be secure financially.
No one knows what will happen to either them, their loved ones or their property from one moment to the next. With insurance, you are protected against unforeseen losses and assured that in the event of damage, injury or death your claim will be settled in line with the contract signed by you and your insurers.
In effect, insurance reduces your financial risk in the event of an unforeseen loss. Just as was mentioned before, the money you would have spent repairing or replacing a lost or damaged item will no longer be borne by you, hence you have the freedom to put your finances to other use.
There are a number of insurance’s in Nigeria that are compulsory. This means that any persons, groups or organizations that do not have the compulsory insurance’s can be prosecuted and face huge fines or even jail time, if caught. Below is a list of insurances that are compulsory in Nigeria as at 2016:
Having an insurance cover basically meets your needs. You need to have insurance for your vehicle to protect you from unforeseen losses.
Now you know 5 reasons why you must purchase an insurance policy, I want to give you a few tips on how to go about it. Hope they are helpful.
Now you know the reasons why insurance is very important, hence the urgent need for you to take up an insurance policy. My advice is go out and get one as soon as possible, you won’t regret it.