Mr Dayo is a successful business owner with cooperative employees. He loves and cares for his family very much. To make ends meet, Dayo, like many other bread winners, go through unexpected challenges that come with its own financial risk and losses.
Ms. Felicia happens to be a single and independent lady, with a great acting career. She also has siblings with families of their own. She enjoys a measure of comfort that many of her contemporaries find difficult to attain because of rising economic depression. Felicia has a very positive outlook in life and believes life would always bring her comfort so long as she is optimistic and hardworking.
Now Dayo’s family are struggling to cope emotionally and economically with his sudden demise as the soul bread winner. His employees who are also bread winners or have dependents, find themselves unexpectedly displaced financially. Felicia is struggling with a life threatening disease that is draining both her resources and her siblings’.
The above scenarios illustrate incidents common in life. Both Dayo and Felicia may or may not have considered what impact their untimely death may cause to those dependent on them and their loved ones. Sometimes, we may fall into a similar pattern of unawareness. For many of us, the thought of thinking through what our families or dependents may go through if we die untimely is scary indeed. Every day we fight our fears through faith and hope. True, life requires faith and hard work to live against the odds but it also requires being realistic about the possibility of unforeseen outcomes that characterise todays uncertain world.
In Nigeria, many today tend to shove aside the need to get a life insurance, or may already have one obtained through their employer but are not fully aware of the advantages it plays for both married and unmarried individuals. What is a life insurance and what types are available? What may be the reason why some may be reluctant in purchasing a life insurance? Are the reasons justifiable? What are the benefits in getting one? These are some of the questions needed to evaluate how important a life insurance is and how necessary it is to obtain one.
What is a Life Insurance?
Life insurance is an agreement or contact between an insurance policy holder and an insurance company, in which the insurance company agrees to pay a designated amount in exchange for small regular payments by the policy holder. A policyholder or the one paying for the insurance policy could be married couples, family heads, guardians or single individuals without dependents. Usually, a life insurance guarantees the financial safety of a family, dependents, or benefactors from economic loss if the insurance policy holder dies untimely or is incapacitated. In this case, the insurance company agrees to pay the family or benefactors a designated amount, usually substantial to cover financial loss. Life insurance policies vary by terms depending on the insurance company.
There are two kinds of life insurance: Term Life Insurance and Whole Life Insurance. A term life insurance protects one for a limited amount of term or time e.g. five to ten years. That means the policyholder is obligated to regularly pay small amounts known as premiums to the insurance company for a similar five to ten years. If the policy holder dies after exceeding the duration of term, the benefactors get nothing from the insurance company or insurer. Renewal of term policies can cost more at each renewal.
Whole life insurance is the kind of life insurance sold by many life insurance companies. This kind of policy protects one for a lifetime generally a one hundred year period.
Reasons why some people may be reluctant
- Waste of Money. Because economic pressures increases by the day for most people, some believe that paying up on premiums on regular intervals is more of a liability or waste of resources. In other words, such money could be used for investment instead.
However, not all investments lead to a predictable outcome as a life insurance. If the welfare of dependents or beneficiaries where of primary importance, then one could also view a life insurance as an investment to financially protect the beneficiaries.
- Too expensive. Some assume that most insurance policies are too expensive to purchase.
In Nigeria, there are many insurance companies that are selling life insurance and certainly with different terms and policies that could fit just about every kind of budget. A careful market research would help you obtain something reasonable. Remember a stich in time saves nine.
- A Life Insurance is already provided by my employer. Although many government agencies here in Nigeria and few private organisations provide life insurance for their employees, many of these employees may be reluctant purchasing an individual life insurance.
However, such policies can have their own disadvantages since many employers offer supplementary life insurance policy that provide modest coverage that may not meet up with the needs of the benefactors. Additionally, such policies would no longer hold for the individuals if they leave their workplace.
- Life insurance is too complex to decide a better one. Life insurance policy can get complex at times. Policyholders may or may not know all the details attached to the policies to make a better choice from various insurers.
Usually, there are insurance agents or company representatives that are committed to a particular insurance company. They can help enlighten one on the basics and help one decide on just how much insurance one needs to purchase.
- Having no dependents. Some may reason that they have no children or are single; therefore, getting a life insurance is irrelevant.
Though one may not have dependents, the fact remains that there are still expenses that must be covered in the event of an untimely death or disability. Family and friends, without doubt, would undergo stressful financial times when such expenses are not planned or finances are limited.
- Believe in Superstitions. Superstitious believes are quite strong for some people, especially, for those who strongly uphold traditional believes. They may reason that purchasing a life insurance would be like shooting themselves on the leg. In other words, you are inviting your untimely death by the ‘unknown’ and just too early.
If you sometimes fill that way, then it would be great to get to know as many policyholders as possible and observe them to confront your fears.
Benefits of having a life Insurance
The benefits of having a life insurance are numerous and applicable to both persons with or without dependents. . Here are some good reasons to purchase a life insurance.
- A smart investment Life insurance can be a forced way to save depending on the type of insurance policy one buys. Each month the policyholder pays a premium; this invested money in turn accrues a cash value. Some find it useful drawing income from the accumulated value.
- Covers Your Mortgage well into the future. For many people living in the cities, mortgage could be the largest incurred debt. The benefit of a life insurance is that payment for mortgage could be planned well into the future to benefit your relatives who may be dependent on you. In this case, large amount of money to cover mortgage could be paid off to the beneficiaries in the event of an untimely death.
- Retirement savings. Many do not foresee the challenges that come with old age. Certainly, after retirement and as you advance in age, new needs arises that were not present your budget while being young, for example health issues related to old age. The benefit of a life insurance in this regards is that the regular stream of income from the accrued value of the premium could also serve like pension plan.
- Now is affordable than future. We don’t have to wait till old age to realise the importance of a life insurance. One may reason that he or she does not need a life insurance since they may be single with no children. However, if you are financially committed by co-signing a loan with your families or friends, you may have to reconsider getting a life insurance to serve your family and friends from distress and embarrassment. Doing so would not only be beneficial for them but can also serve to enhance the reputation and name you live behind if an untimely death occurs.
- Cover for debt. Where there is no life insurance policy in place, it is common to see many families undergo financial stress in the event of an untimely death of the breadwinner. Families may be dealing with issues of auto loan, personal loan, mortgage etc. providing financial security for surviving dependents would save them from needless embarrassment and distress.
- Takes care of your business. Depending on the policy bought, some life insurance takes care of your business in various ways. One way is by ensuring a smooth succession plan to reduce conflicts. This is especially beneficial for businesses where you have other business partners. In this case, the life insurance funds the buy-sell agreement you enter with other business partner(s). The arrangement allows surviving partners to buy a deceased partners share of the business. In turn, surviving dependents receive the share of the business, while the living partners maintain control of the business.
- buying a policy is acceptable when you are healthy. Many life insurance companies do not sell personal life insurance to people who are already on a serious ailment reaching a terminal stage. Certainly, it is a loss to them. But if you already purchased a life insurance policy while in good health, you don’t need to worry. Your life insurance will remain with you.
- Provides coverage in times of critical illness. The benefits of buying a life insurance while young and healthy comes at times you least expect; for both single and married people with or without children. Therefore, buying the right kind of life insurance policy can provide financial protection for family and friends in the time of critical illness.
- Provides coverage for funeral cost and will. Both funeral and will can be planned with a life insurance policy. The coverage granted eases the burden for family and friends to take up the duty of paying for expenses left behind by the deceased such as house rents, medical expenses if faced with terminal illness, funeral expenses, debt, etc. This advantage makes a life insurance policy still relevant for people without dependents.
Should you get one?
Many of us may not like the examples of Dayo and Felicia mentioned earlier in this article to be applied in our case. To avoid the effects of such financial distresses that accompany an untimely death, it is necessary to consider having a life insurance. So long as we live in a world full of uncertainties, everyone living has a probability of dying some day or going through unforeseen circumstances that may be life threating. The fact remains that we owe our dependents love and a sense of duty. So never let trivial excuses stop you from preparing for the unexpected.Click here to see the latest Jobs opportunities in Nigeria.
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