Chiamaka Ajeamo, [email protected]
When most Nigerians are asked questions about insurance, what readily comes to their mind is individual auto or homeowner’s insurance policy. Some even think about the insurance premium they would make monthly to keep their businesses running.
It is not often that people immediately reflect on the benefits that insurance companies play in stimulating the economy But it is an incontrovertible fact that the role of insurance sector to a nation economy cannot be over-emphasized.
There are indeed several kinds of insurance policies that customers can choose from today although the mandatory ones approved by the Nigerian law are seven in number. The compulsory policies today include Motor Third Party, Employee Grouplife, Health Care Professional Indemnity, Insurance of Public Buildings, Buildings under Construction, Aviation Third Party and Marine (Cargo) insurance, and notable among these various forms of insurance is Life Assurance Policy, though not mandatory.
In recent times, life assurance policy has engaged the attention of stakeholders because of its strategic role in socio-economic development with experts establishing that it is essential for the growth of insurance sector because it is a business that directly affects every life.
Notwithstanding the importance of life assurance policy, it remains at an infancy stage in Nigeria as most people do not see the need to subscribe to it. The situation also applies to Group Life Assurance which is compulsory as stipulated by the Pension Reform Act 2004 as amended in 2014 for employees in an organisation.
According to findings from Daily Sun, there are several factors that show that many people shun life assurance policies due to their perceived religious biases, lack of integrity on the part of the insurer, low awareness and low knowledge of how the policy works.
Many have also distanced themselves from life insurance policy because it provides little benefit for the insured while alive. Most people have equally expressed concerns that most of the policies sold in Nigeria mature at the insured’s death. In such arrangement, the insured barely profits anything while alive after paying premium for several years. Instead, all benefits are given to the next of kin of the insured after death. With this perception, many see it via the religious angle of signing their death warrant and thus give it no consideration and regard it least on their scale of preference.
Commenting on the perception of average insurers, the Managing Director/CEO Capital Express Assurance Limited, Adebola Odukale, faulted claims that life assurance policy which is a contract between an insurance firm (insurer) and a policy holder (insured) whereby the insurer pays a designated amount of money in exchange for a premium at the death of the insured, has little relevance to the insured while alive.
Odukale explained that the benefits to be enjoyed by an insured depends largely on the type of life assurance subscribed to. She noted that the assured can also be paid when alive as events such as terminal or critical illness and accidents suffered by the insured can be handled by the policy.
According to her, life assurance is the second arm of insurance practice all over the world. It is as old as the Gaming Act of 1774. It consists of individual (retail) Life and Group Life Assurance businesses. While the individual life is at the discretion of the people within insurable age, the Group Life Assurance became a compulsory insurance in Nigeria through the promulgation of Pension Reform Act 2004 (as amended in 2014) whereby any employer of labour with a minimum of three employees must put in place a Group Life Assurance Scheme for the welfare of employees.
While listing the importance of the policy, she said that individual life assurance products could be designed to meet investment needs, protection needs and also, or a combination of the two according to the needs of the people. It is also intended to meet future targets of the insured.
“It could be used as saving plan to accumulate funds for specific future needs while enjoying the benefits of a life assurance. A key feature of individual savings plan is that it is for a short term and there is opportunity to re-invest such fund. The return on investment of such savings plan is a guaranteed rate of interest that is insulated from the fluctuations in the investment market.
“The products are created in such a way that the premiums are affordable and convenient to pay, that is, the premium can be paid monthly, quarterly, half-yearly, yearly and as a single premium. The lump sum maturity benefit may be converted to annuity at the request of the policyholder. Where the policy is for protection, it could be tied to providing cover for credit facility, mortgage facility or a term assurance with cheap premium. It provides a guarantee that insurance proceeds will definitely be paid, whether the life assured dies within the insurance period or lives up till maturity. If, the assured wants to opt out before maturity date, there is opportunity for that and will collect the surrender value due to him/her,” She explained while speaking in an interview with Daily Sun.
On the group life policy, she said it is designed to meet the death-in-service need of the employees of an organisation as death of an employee can result in financial burden to an employer, if it has to make obligatory payment to members of the employee’s family. The policy pays a pre-determined sum to alleviate the suffering of dependents of the deceased when the unforeseen happens especially, in cases where the deceased is the breadwinner of the family.
According to the Executive Director, Technical and Operations, Universal Insurance plc, Paulinus Offorzor, life assurance is a lifelong investment which enables one to take care of events that would have negatively impacted on his/her life while still alive and even when one is gone, it leaves money or resources for the people one has left behind. This is because the basic subject matter of life assurance is the person’s life not just death. Death will happen but what death does is to cut short the existence of life.
Offorzor however, noted that life insurance exists in different forms which include; whole life package which has to do with everything that concerns one’s life until death as well as packages that are in bits and pieces an assured can benefit from when alive.
“It is an investment and the people that understand the importance of having this policy will know that assuring the whole life is on a general term and go ahead to insure that part of the body that brings economical gains to them. This is called risk transfer mechanism because what one does is that the risk of losing that part of your body that brings in income for you, you move it to the underwriting firm
“In life assurance you can insure a part of your body, a keyboardist will tell you he does not have any need with his legs that he wants to insure his fingers because that is what brings in income for him. A photographer too can tell you he wants to insure his eyes, because that is what he uses the most which brings income for him. If anything happens to his sight, his source of livelihood has gone.
Meanwhile, the fact that he has lost his eyes or one of them does not mean he is dead but economically, he is dead. Footballers likewise, insure their legs because it is what brings in money for them. So, life assurance has a whole life package, everything that concerns your life and also bits and pieces in the package”, he concluded.