PERHAPS we should start with what life insurance is. Over the years, certain things have been perceived as priceless; the human life, peaceful co-existence, and works of art. Therefore, if life is priceless, any price placed on it would make it less, as it wouldn’t be a true estimation of its value. I guess the word ‘insurance’ is a familiar one as we define life insurance. Wait a minute! Does this mean that the human life can be indemnified? How does it work, what really is life insurance? Life insurance policy is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to a named beneficiary upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured. This is often calculated with a free asset ratio.
In an article written by Julia Kagan a professor of financial journalism at Indiana University, she reiterated that the purpose of life Insurance, is financial protection to surviving dependents after the death of the insured, i.e. it is a form of investment for those survived by you. From my observation, life insurance transcends financial benefit at death, to a financial plan in active service through the various covers of health insurance, critical illness cover, accident plan, etc., to after service via various means as pension, gratuity and annuity after all, life is most beneficial when you are alive, as well as in death with a death benefit and funeral arrangement in certain policies. More often than not, life insurance is either for a term or on a permanent basis. Life Insurance policy pays a predetermined sum which is the face value of the policy to a named beneficiary while permanent life insurance provides lifetime insurance protection as it does not expire, and sometimes offers savings or investment combined with the insurance coverage.
Insurance practice can be slightly different from country to country, needs and localised content, but the principles are the same. Here are some tips in purchasing a life insurance product: make sure you obtain adequate illustration and detail of the policy you have chosen (the condition, clauses and exclusion).Always shop for a level-premium policy. Determine the expiration of the coverage, so as to purchase the desired policy type and keep your premium payments affordable. Keep sugar and caffeine out of your system 24 hours before your medical examination. Note if your premium is too high due to medical reasons or you are denied coverage, check if there is a group plan available with your company as it does always require medical examination.
Nigeria is the most populous African country with a growing middle class, according to the World Bank. Growth in the middle class together with improvements in education and literacy levels are likely to drive growth in the insurance market as offerings become more affordable and better understood. These education and literacy trends are promising for increased insurance take up, as approximately ninety per cent of insured individuals in Africa are secondary and tertiary education graduates. Increases in life expectancy in Nigeria, also identified as important demographic change, has put pressure on insurers particularly in the life annuity segment. Forty four per cent of the Nigerian population is under the age of fifteen to twenty years, while three to five percent per cent are over retirement age. This implies that there is slightly more than one adult of working age available to care for each dependent in the population. According to the National Bureau of Statistic. The urban population is projected to increase from 47 per cent of 2014 to about 67 per cent in 2050. Increasing urbanisation and affluence are usually accompanied by accumulation of assets, to improve living conditions, thereby leading to increase social life of the middle class coming together to form a new family.
Kudos to NAICOM active role on compulsory group-life insurance and annuity purchase at retirement. The World Bank’s Nigeria: The Next Generation report states that if Nigeria is able to harness this growing workforce arising from its growing population to accelerate economic growth and further focus on improving health standards, there is potential for the average income to triple by 2030 with over 30 million people lifted out of poverty. Little wonder three (3) out of the six (6) compulsory Insurance made by law in 2003 deals with the welfare of the citizens: Group Life Insurance in line with the PENCOM ACT 2004, Health Care Professional Indemnity Insurance under section 45 0f the NHIS ACT 1999 and Employers Liability in line with the Workmen’s Compensation Act 1987. The bottom line when seeking insurance is, don’t rush into buying, always consider if the policy suits your needs. Life insurance is not a myth or an act to herald your death. By purchasing life insurance, you are betting that you will live, and also securing peace of mind in case it doesn’t work out that way. Don’t leave your family unprotected in the sudden event of your death. After all, they are your most important assets.
- Oyekolade is a legal practitioner
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