• Thursday, July 25, 2024
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BusinessDay

Insuring your peace of mind: Why insurance is a smart investment

Edo seeks insurance adoption to drive development

Insurance is an important part of financial planning and risk management, but a lot of people see it as a scam, especially in Nigeria.

I recently went to an event where almost half of the people there (who were educated) said they perceived insurance as a scam because premiums are paid even if the risks insured against don’t happen. Despite the benefits of insurance, many Nigerians are hesitant to adopt it.

I will share a few reasons why people don’t embrace insurance, but first, let’s look at how insurance benefits you and how your personal finances can benefit from it.

Insurance protects you from things like medical emergencies, car accidents, and damage to your home that could cost you a lot of money. Without insurance, you may have to pay for these fees out of pocket, which could hurt you financially.

Having insurance gives you peace of mind, and knowing you are protected against disasters you didn’t plan for can make you less worried and stressed about money.

Insurance reduces risk and reduces the amount to be spent in the event of a risk materializing. For example, if you have car insurance, you’re less likely to get into a costly accident and have to pay for repairs. This can help keep your personal finances on track.

Insurance increases savings over time. Life insurance can help your loved ones maintain their quality of life after your sudden death without draining resources or falling into debt.

Now, let’s look at why a lot of people, especially in Nigeria, don’t leverage insurance.

Inadequate Education and Awareness

One of the main reasons why not many people in Nigeria have insurance is that they don’t know much about it or how to get it. Many people are unfamiliar with the concept of insurance and its associated benefits. As a result, they are hesitant to pay premiums because they are not convinced that insurance is necessary.

Insurance companies have little trust

Another reason Nigerians are hesitant to purchase insurance is a lack of trust in insurance companies. Many Nigerians don’t trust insurance companies because they think they are unethical and care more about making money than helping people. This lack of trust makes it difficult for insurance companies to gain new clients.

Religious and cultural beliefs

Cultural and religious beliefs play a significant role in Nigerians’ reluctance to embrace insurance. Many Nigerians believe that paying insurance premiums is a waste of money and that they should instead put their trust in God for protection. Others believe insurance is a Western concept that contradicts their cultural values.

Claim settlement is viewed negatively.

Claims settlement is an important part of insurance, and in order to keep customers’ trust, insurers must pay claims quickly and fairly. But there have been reports that insurance companies in Nigeria have been slow to pay claims or even refused to do so. This negative perception of claims settlement has contributed to Nigerians’ aversion to insurance.

Insurance is prohibitively expensive.

Lastly, Nigerians aren’t as likely to get insurance because they deem it expensive. Many Nigerians think that insurance premiums are too expensive for them to afford, and the country’s high levels of poverty support this idea.

To get more people to buy insurance in Nigeria, there needs to be more education and awareness campaigns, better ways to settle claims, and cheaper insurance products. Insurance can become more accessible and beneficial to Nigerians by addressing these issues.

What types of insurance can you immediately consider?

Under the life insurance group, you may consider

Children’s Education Plan

Annuity Plan

Whole Life

Funeral life celebration

Investment Plan

General insurance options will include:

Health Insurance

Motor Insurance

Property Insurance

Travel Insurance

Liability Insurance

Workman compensation

Employer’s liability

While we are at it, please ensure you read more about insurance, take the necessary steps, and hit the ground running to protect your wealth.