Many atimes people are being faced with great uncertainty in their business, houses, or even health condition and this kind of situation is what insurance came to solve.
What is Insurance?
This is a kind of contract signed by two parties- the insured person and the insurer by reaching an agreement on a particular amount of money called premium to be paid monthly or yearly in order to be protected against futuristic damage. There are reputable insurance company one can choose from in securing of their asset depending on the nature of the asset such as car insurance company which protect and covers expenses in event of accident, theft or injury in the cause of operating the vehicle.
There are several types of insurance one can leverage on. In other to choose the right insurance best fit, you have to critically evaluate the following:
(a) The Reason for Insurance
(b) Nature of risk you are exposed to
(c) Your financial status
(d) How long you might need the insurance
You have to ascertain the reason why you really need an insurance. Let take for instance you are into agriculture and you have a poultry farm where you rear livestock which peradventure cost you an arm and leg to start up. Because of this nature and size of this business, you might choose to insure this farm in other to be protected.
Reviewing the second question to ascertain the kind of risk you are exposed to, let use the same scenario of the poultry farm. In poultry rearing, there are several risk that endangers the success of this business ranging from contaminated feed and water to fire outbreak. When these happens, it always hard for the farmer to regain its financial status and sometimes it leads to permanent close down. So in other to ensure you are protected and covered from this uncertain events, it very paramount to get your farm insured in any reputable company.
On the other hand, you must determine your financial status before insuring any business. Inability to determine your financial status while starting an insurance investment might lead to loss of coverage and hence termination of the insurance contract if you fail to pay the premium at when due.
Lastly, knowing the duration of the expected insurance is important. Ensure to plan it out on time and choose your insurance coverage wisely.
How Insurance Works
No matter the kind of security you choose, you are covered by the insurance company. Be it agriculture, health or Life insurance, you get paid or reimbursed in case of any mishap. This coverage must be bought by paying a specific amount of fee monthly or yearly known as premium which is determined by some factors such as location, age, past history, etc. If at the end of agreed period you didn’t make a claim, the insurance company might reimburse you or give you discount on your next insurance.
What is Insurance Premium
Insurance premium is the fee payable by the insured person to the insurance company for the purchase of coverage. This fee can be paid monthly or yearly depending on the agreement reached in the insurance contract. Before any insurance company can determine the premium rate, factors such as location, age bracket, past insurance history and value of the asset must be critically determined and evaluated. In a nutshell, the higher the risk the higher the premium.
What is Insurance Deductible
An insurance deductible is the specific amount of money that an insured individual or policyholder must pay out of pocket before their insurance policy kicks in to cover the remaining costs for a covered loss or claim. In other words, it is the portion of the claim that the policyholder agrees to bear themselves before the insurance company begins to contribute. In otherwords, the higher the insurance deductible the lowwer the premium
How Insurance deductible works
The insurance policy is purchased, and it includes a specified deductible amount to be paid before claim.
If a covered loss occurs, such as an accident or rebuilding of a collapsed building, the policyholder will need to pay the deductible amount before the insurance company steps in to cover the remaining expenses of the incident, up to the coverage limits
For example, if a policyholder has a #700K deductible and a claim is filed for #4m in damages, the policyholder would pay the first #700K, and the insurance company would cover the remaining #3.4m.
The aim of a deductible is to share the financial risk between the policyholder and the insurance company.
Types of Insurance in Nigeria
There are different types of insurance available in Nigeria. We will explore a comprehensive list of available insurance one can purchase in Nigeria in order to be provided with protection and coverage against future risk.
1 Life Insurance – This is the kind of insurance that provide pay out to the dependent on the event of death of the insured individual. It helps to provide financial support to the family or dependents of the insured.
2 Health Insurance – Health insurance covers all medical expenses and hospitalization costs for the insured individual or their family members which they may encounter during the insurance period. It helps mitigate and limit the financial burden of medical treatments and the facilitates quick medical attention in case of sudden sickness.
3 Liability Insurance – This type of insurance covers legal liabilities arising from third-party claims for injuries arising from accident, damages, or losses caused by the insured. This does not cover the insured personal injury rather, the third- party which is why it important to purchase a coverage that can cover both the insured individual and that of the third party.
4 Property Insurance – This insurance type covers the loss or damage to insured property or assets due to events such as fire, burglary, or other unforeseen circumstance.
5 Motor Insurance – This is also known as auto insurance or car insurance. This type of insurance provides coverage for your car against damages and liabilities arising from accidents, theft, or other incidents that may occur.
6 Agricultural Insurance – This type of insurance is designed to protect agricultural businesses against risks related to crop unviability, livestock death, and other agricultural products.
7 Travel Insurance – Travel insurance offers protection coverage against unexpected events while traveling. The risk such as trip cancellations, medical emergencies in the event of accident or auto crash, lost baggage, or flight delays are all covered by the travel insurance company.
8 Fire Insurance – Fire insurance protects and covers against damages caused by fire to the insured buildings, structures or warehouse.
9 Professional Indemnity Insurance – Professionals like engineer, lawyers, doctor and artist can purchase this insurance to protect themselves against claims arising from uncertainty such as errors, omissions, or professional negligence in the discharge of their professional duty.
10 Business Insurance – Business insurance is a vital financial tool that provides protection and peace of mind to businesses operating in the country. It encompasses a range of insurance products designed to mitigate risks and safeguard business assets, operations, and employees against unforeseen events that could lead to financial losses
Importance of Insurance in Nigeria
Insurance plays a very vital role in the financial security and protection of individual asset. The following are the importance of Insurance
Risk Management and Prevention: Insurance helps individuals and businesses to manage and mitigate effect of risks
Fosters Investment: Insurance can provide confidence to investors and lenders, knowing fully well that potential risks are adequately and securely managed.
Risk Sharing: Insurance operates on the platform of risk management and sharing from both the insured individual and the insurance company.
Promotes good sense of behavior: Insurance can promote responsible behavior on the insured individual. For example, health insurance encourages individual to always seek for medical attention at when due and hence help prevent severe health issues.
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