Most people in Nigeria don’t have an insurance package, not because they don’t know anything it but because they feel insecure about insurance policies and do not trust insurance brokers with their money. Most people do not know the type of insurance policies that are available to them but a lot of people have a life insurance policy while some others have health and business insurance policies. Some people who have properties also have mortgage insurance policies. But it is important you know which is important to you and why.
We all suffer losses in our lives. It might be the loss of a job, properties, loss of life or limb, health defect or illness. This makes it very important to cover any risk we may encounter in our lives. One way to do this is by having an insurance policy or pension fund policy.
Insurance is defined as the equitable transfer of the risk of a loss from one entity to another in exchange for a premium and can be thought of as a guaranteed and known small loss to prevent or take care of a large, possibly devastating loss. What this means is that an individual can transfer his losses to an insurance security manager in exchange for a fixed amount of payment called a premium until that loss would occur.
There are several types of insurance policies which include;
a. Auto (car) insurance which is an insurance policy for the vehicle you purchased. When you qualify to get the money you payed for, is when your vehicle either gets stolen or is damaged in an accident. If your vehicle doesn’t get damaged, the matured premium can be used to purchase another premium.
b. Home/Mortgage insurance is an insurance policy you get for your house or real estate property. It also covers all movable properties in the house or real estate property. You can get paid for experiencing a loss in the loss of your house or property through fire or destruction through natural causes or demolition. Remember if your insurance company, discovers that you used fake or inferior building materials which caused the falling of your property, you will loose your insurance policy.
c. Health insurance is an insurance policy that takes care of your health issues. You do not need to fall sick or ill to benefit from this policy because you can visit the doctor for a regular check up. If you don’t use the policy, the matured account can be used for the next policy.
d. Life insurance is a type of insurance policy that covers the loss of life or a limb. What I don’t seem to understand is if the loss of a limb can also be covered by the health insurance because important surgeries also are covered in health insurance policies.
e. Business insurance is an insurance policy that covers your business. Business people also experience losses through fires, expulsions, theft and bankruptcy. If the business is seen to be involved in bad business dealings, it might loose it’s policy.
f. Unemployment/education insurance are type of policies for unemployed people who do not have a job and for students studying in school. One thing I find funny is that an unemployed person can not maintain a policy when he/she doesn’t earn a regular income. The education insurance policy is good in the fact that there might not be available funds to send your kids to school in the future and this policy can help solve that problem.
g. Pension funds is an insurance policy that covers your retirement plans. It is also called a retirement insurance plan. You need to pay a small amount of your earning income to save for your retirement. Most people think you need to earn an office/regular job to pay for this type of insurance. Even a private person who does his thing can pay for their retirement because you won’t continue doing what your doing forever.
All insurance policies have their terms and conditions and one important thing is that you will loose your policy if you do not have a genuine claim. I know that you do not need to commit suicide or be sentenced to death or else you would loose your life insurance policy.
For me, I would purchase a health, business, house/mortgage and education (for my kids) policies. I might not get a life policy since I can put my life savings in a Recurrent Deposit Account (RDA), which is like a Fixed Deposit Account (FDA) but the only difference is that in an RDA, you re-currently while in an FDA you pay once. An RDA has a higher interest rate from a life insurance policy in that has a rate of 10 to 18% interest rate while a life insurance policy has an interest rate of just 7.5 or 8%.
So what type of insurance policy would purchase now that you know all you need to know about insurance policies?
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