INCOME PROTECTION INSURANCE| WHAT YOU NEED TO KNOW IN 2019

INCOME PROTECTION INSURANCE | HOW CAN YOU PROTECT YOUR INCOME

Insurance is a way of ensuring risk management and possible ways of curbing risk to save finance and more also serves as an instrument to save you for unforeseen events either long or short term. Your income is what actually should be preserve in order to meet your needs both present and future or even after death for your beneficiary/nominee. Income protection Insurance is an insurance policy that covers you for your inability to work, this policy does not over you after death but a separate policy like the life insurance policy covers you for death.

Income protection insurance is a policy that pays benefits to policyholders who are unable to work due to the accident or illness, this policy was formerly called the Permanent Health Insurance (PHI). There are certain concepts we need to understand in the income protection insurance and these concepts will best help us identify how well we can save and protect our finance. We need to understand how this concepts of income protection insurance works and then we should also know what we really want out of it. These concepts may include:

1)    Incapacity

2)    Benefit Limits

3)    Deferred Period

4)    Proportionate Benefit

5)    Free Limit

1 Incapacity: Incapacity here means inability or been incapacitated and there are certain reasons why incapacity is regarded as one of the concepts of income protection insurance:

A  Activities of Daily Living( ADL): This policy defines your functions and duties so that when you are unable to perform these functions or duties due to illness or accident it can protect you from that.

B  Any Occupation: This is when the policyholder is unable to perform any occupation at all due to illness or accident

C  Suited Occupation: This is when the policyholder is unable to perform duties assigned to them due to illness or accident.

D  Own occupation: The policy covers a policyholder if he/she is unable to perform their own occupation and definitely not occupied by another job.

2 Benefit Limits: There are usually a stipulated percentage that is been payable to the policyholder from its normal earnings. In some cases it is at about 70% but could be lesser or higher

3 Deferred Period: This is the period between a valid claim and when a commencement of benefits is payable and should be payable.

4 Proportionate Benefit: This is to encourage the policyholder to return to their work and in most cases decides to offer reduced benefit if the policyholder decides to take up a lower paying job after recovering from illness.

5 Free Limit: The income Protection Insurance will be valid only if the policyholder lives in a particular area that is stipulated in the policy. Most policies allows for temporary residence outside areas such as UK, USA, and Western Europe.

TYPES OF INCOME PROTECTION INSURANCE

There are basically three types of IPI and they are:

1 Agreed Value

2 Indemnity Value

3 Loss of Earnings

1 Agreed Value: This type of Income protection Insurance is usually proven upon taking up the policy. There is a fixed amount you will receive regardless of the increase or decrease in your income. The premium you pay for in this type of policy can be much higher by 20-25%  than the indemnity value which we are going to discuss next. 

In this policy, you can summit a proof of income through an application before or after your policy begins and it assures you of a monthly benefit thus if you cannot provide a proof of your income application before or at the period of your claim, the amount of the monthly payment that would be relieved may likely reduce.

2 Indemnity Value: In this type of income protection Insurance, the payment of your benefit is based on your declaration at the initial time of taking up the policy that is you will be asked to declare your salary when taking up the policy and the benefit will be paid on that which you have declared. The amount of benefit paid to you by the insurance company will be 75% lesser of your pre-disability income or the amount insured in your policy.

Pre-disability income here means the income in you earned over the last 12 months in a specific period of time. Under this kind of policy, financial checks are mostly required and essential when you file out a claim and if this claim was ensured by you, you could reduce the amount of benefits that is to be paid if you have recently earned less before the policy began.

3 Loss of Earnings: This type of IPI is similar to the indemnity value/protection where the benefits to be received will be based on your actual income rather than the income at the time of making a claim. For example if your salary or earnings is $80,000 a year and you were injured to the extent you decided to take a break off work, your income shortfall will still be $80,000 but if you were still able to work part time, your income might reduce a little by $30,000 which means that your benefit is based on a shortfall of $50,000 rather your actual benefit of $80,000.

INCOME PROTECTION INSURANCE FOR SELF EMPLOYED

Income Protection Insurance for self employed is a policy that guarantees payment if you are unable to work due to an injury or illness. This policy pays a monthly income until you are fit and able to return to your work or for a stipulated period of time usually 12-24 months. The benefit of this IPI for self employed is that:

1 It puts you n a better position to over your expenses, manage debts, and taking care of your loved ones when you are unable to do so.

2 It give you an assurance that things are going to be better by making you think lesser of how you are going to pay your bills, debts and other expenses and make you focus on how to get back to your health position once again.

PREMIUMS OFFERED

When choosing a policy most especially the life insurance policy, there will be an option to choose between a level premium and a stepped premium.

1 Level Premium: This kind of premium is relatively expensive at the beginning of acquisition but consistent.

2 Stepped Premium: This kind of premium increases as you grow older but is cheaper at the beginning unlike the level premium however it is important to consider rising cost over time.

LONG TERM INSURANCE PROTECTION

A long term insurance protection plan usually covers an individual up to the age he/she decides to retire from work. Long term protection also covers serious illness and incidents, strokes and heart attacks or where you are permanently unable to work. This long term plan feature things like:

A It covers you until you retire

B More costly than the short term plan

C The potential payout is usually increased

D Underwritten

E Greater certainty over premium

F More severe conditions are usually covered

SHORT TERM INSURANCE PROTECTION

Short term income protection products are likely underwritten while others which would help to speed up the acceptance and application process are of short term. Unlike the long term plan which is for a longer period of time even up to the death of the policyholder, the short term plan are for short term illness or injuries that causes inability to work. 

This means that even if a consumer had no proper mediation or has seen no doctors for a given period of time, the insurer (insurance company) may still try to exclude the claim incase there are certain pre-existing condition that the insurance company had to beware of. So it is worth it if the consumer knows exactly what they are to be covered for and this should include:

1 Cheap rate: It should be cheaper than the long term plan

2 Unlike the long term which is generally underwritten, the short term is not underwritten

3 More conditions are excluded

4 More flexibility

5 Premium renewal is not certain

IS INCOME PROTECTION INSURANCE WORTH IT??

Having known what Income Protection is all about which was included in this article the definition, types, benefits, premium offered and other tips, you should now be considering if income protection insurance is really worth your money, probably you haven’t thought of that, we would be illustrating some points to show if it is really worth taking up an income protection insurance or not….

Income protection insurance assures you of payment of benefit in the event which you cannot work to earn your normal income due to illness or injuries. Most people prefer insuring their property like their cars against accident but in case you didn’t insure your car (uninsured car) and it eventually gets destroyed, it might take a very long time to recover financially.  

However, have you imagined losing your income for an extended period of time, yea, you might recover financially because your finance could take care of you till you recover from such illness and the money spent could be recovered in a shorter period of time due to your savings, annual leave, family help, or sick leave but what if you were involved in a fatal car accident and couldn’t work for a longer period of time let’s say 6-7 years, it is very much likely that such event could put you in a big financial debt then this is where IPI long term plan would help you recover fast.

Another reason is that Income protection Insurance is worth it is because life could turn to the negative side un expectedly, suppose you are working in a paid position, this policy protects you and your loved ones against any financial impact of losing your income when you get ill or involved in an accident which we do not pry or hope for.

IN QUOTE:

“The Association of British Insurers report announced that protection insurers are helping more families than ever before, while the financial conduct Authority believes that “millions would ideally have some form of income protection”

           The Association of British Insurers

So having outlined some of the benefits of income protection insurance, I can say that the IPI is really worth it especially if you are self employed or in a paid organization.

So what do you think about this? Please kindly use the comment section

WHY YOU NEED A LIABILITY INSURANCE FOR YOUR SMALL BUSINESS TO RUN SMOOTHLY

APPROACH TO LIABILITY INSURANCE FOR SMALL BUSINESS GROWTH AND RISK MANAGEMENT

INTRODUCTION: Having a small business is a start to financial freedom and expansion. it looks far much better than just a dependent or a liability to someone, having so much depend on someone for every of your needs and sometimes become a burden to themselves seek a greater and better chances to explore our ideas, skills and opportunities and therefore opening a small business is a great platform to do so in testing those skills. 

Some may say that the reason why so many people open small business is the fact that they couldn’t afford large ones but I totally disagree because one of the advantage of starting with a small business is that you tend to know what area you are good if you know how to develop your kills (sales method), profit realization and risk management. So in starting up a small business doesn’t always seem lack of start-up capital. in this article, we shall be discussing how you can take up a liability insurance for that your small business, loan utilization, risk management as pertain to your small business. Like I said in previous articles that insurance is very essential in every sector of life like health, travel property, life and so many others, we are going to be seeing some of the advantages benefits, necessity and disadvantages up a liability for your small business and also will be included useful tips to help why it shouldn’t be necessary just yet to take up a liability insurance for that your small business but first:

1 WHAT IS LIABILITY: we have mentioned a couple of times the term liability. According to Investopedia “liability is defined as a company’s legal financial debts or obligations that arise during the course of business operations, liabilities are settled over time through the transfer of economic benefits include money, goods, or services” in other words, Investopedia is saying that liability has to do with the financial state of being responsible for something. 

As in most cases but in other cases it could be services owed to other party probably your clients leads in other services or others who you are liable to when a business is in liability (financially or by services) to others it refers to the situation where the company or business is subjected to income deduction after profit to arrive at a net profit and also services to be rendered which possibly might involve cost in carrying such services. Liabilities are very important aspect of a company because they are involved in the financial operations in the company or business and also pay for large expansions “in simpler term we can say liability is debt to a business either in financial or service aspect”. 

Do note that there is a difference between liabilities and expenses where expenses is the cost of operation as a company or business tries to generate income but due to loss in sales, or mis-management of capital and any other factor could have led to liability of the business.

2 WHAT IS INSURANCE: Insurance is simply an arrangement by which an insured transfers his risk (uncertain tendency to loss) to the insurer at an adequate fee called a premium, on promise that the insured will be indemnified or compensated upon the occurrence of the insured event. Incase of financial loss, insurance serves as a means of protection and risk management. In other words, insurance is a contract between the insurer and the insured where the insured receives an insurance policy which involves the conditions and situations under which the insurer will compensate the insured when any of such arises. 

In this policy also is a stipulated amount the insured will pay to the insurer for coverage depending on the policy taken I called a premium. In general insurance serves as a protection for un-forseen or un expected events that my occur to someone (insured)  thereby transferring the risk of uncertainty  to the insurance company (insurer) who promises to do such as contained in the insurance policy which will be taken up by the insurer and a certain amount will be paid by the insured called the premium.

Read more on Premium

3 LIABILITY INSURANCE: Having discussed briefly about “liability” and “insurance”, fusing this two keywords together “liability insurance” we will agree that liability insurance should mean a kind of insurance policy that ensures that liability of the insured are taken care of by the insurer through premium paid by the insured. Liability insurance is pain, loss, injury you caused on someone through your property. Liability insurance is mostly designed to cover specific protection against third party insurance claims that is in case of any accident; injury or loss, the insurance company (insurer) will take up or pay off every damage you cause on someone.

Please take note that incase of accident you as he at-fault party is not been taken care of rather the person/victim of the situation, most times you can be sued for claims when any injury or damages occur so it is best to own a liability insurance and most especially when you are a car owner. 

For further understanding of liability insurance, it has been treated in one of our articles. Liability Insurance

4 SMALL BUSINESS: We need not to buttress so much on this point because with its word ‘’small business” we should know what it means but for the sake of it, according to Wikipedia“small business are privately owned corporations, partnerships, or sole proprietorship that have fewer employees and or less annual revenue than a regular sized business or corporation. Small business ranges from 2-50 employees”. In many countries small business are regarded as business that include services or retail operations like:

1 Convenience stores

2 Grocery stores

3 Bakeries

4 Hair dressers

5 Traders

6 Guest houses

And more also several professional operations as:

1 Accounting firms

2 Lawyers firms

3 Medical doctors (but these set of people can also work for large companies)

Small business are corporations or sole proprietorship and are limited by:

1 size

2 number of employees

3 Activities and so on….

THE CONCEPT LIABILITY INSURANCE FOR SMALL BUSINESS

Have you ever been indebted to someone or group of persons financially and unable to clear off those debts, its awful I guess, you tend to look frustrated and seek better and faster ways to come out of this debt, that’s why you should consider having a liability insurance for that your business. 

Liability insurance helps protect your business from claims that will lead to the negative growth of your business and thereby affect your normal business operations. Liabilities of small or large business could include:

1 Advertising injuries

2 third party bodily injuries

3 sales injuries

4 Loan

5 medical payments for employees

A small business could be liable and sued for any of the above mentioned and compensation will have to be paid as long as you as the business owner is at fault but in a cause where you take up a liability insurance, the insurer provide coverage for this and relieve you of out-of-pocket expenses. This policy also provides compensation for defending or investigating a lawsuit, police report, cost of witness fees, any judgment or settlement resulting from the lawsuit filed against you or your business and court cost including attorney’s fees.

A liability insurance business covers you for a situation like coming into contact with the public on your property or elsewhere, do you have any business dealing with the public like offering services then you need a liability insurance for your business. In essence we are saying that having a liability insurance give you the confidence of going through your daily business activities in confidence knowing full well that you are covered by any unforeseen or unexpected events, you will also be needing employers liability insurance for your business.

In most countries of the world, liability insurance (public) is not compulsory for your business by law but people most times decides that it is very important that they opt in for it because it protects them from compensation cost and also satisfy the needs of their clients as it can protect you when someone tries to sue you so you need it, in simpler way we could say if you do come in contact with the public, interact with customers, suppliers or passersby in carrying out your work then you may decide to go for liability insurance cover. Having wondered if you should take up this cover or not is totally depended on you, if you can afford to meet up with the cost of compensation claim when you are sued and don’t have a cover then you could just ignore having liability insurance.

TYPES OF LIABILITY INSURANCE

There a different types of Liability insurance that you could opt in for depending on your needs or you could just decide to have the whole of liability coverage depending on your pocket and your needs but here are different type of liability insurance cover:

1 Product liability

2 Professional liability

3 Public liability

For further understanding visit types of liability insurance

Many at times we come across certain things we do not expect and thereby give us a cause to worry about and most especially these things likely reduce our finances. You are a business owner and don’t have a liability insurance for your business that may be due to the fact that you don’t need it or ignorant of it, but in our article so far we talked much about liability insurance for your small business but these are also helpful tips that you should go through for better understanding, here and now we shall be highlighting some of the advantages (pros) and disadvantages (cons) of having a liability insurance for your small business:

ADVANTAGES OF LIABILITY INSURANCE FOR YOUR SMALL BUSINESS

1 It offers protection for your business: liability insurance offers protection for your small business in a way in which any form of unforeseen or unexpected circumstances happens then you will be covered. For example, you are into transport business (moving people from one destination to another) for every passenger in your vehicle, you are liable for its safety till he/she gets to her destination, so if an accident occurs within this period, you are liable to cover the expenses such as injuries, medical bills and any other expenses that may quickly rise up.

2 It helps defend you and your business against claim: Have thought of your clients or customers suing you for damages you never expected could have happened, if such occurs some may try to make a compensation claim then surely you will need a legal assistance in order to assist or defend your case and for sure this could be costly. Okay finally you were successful in the case, have you thought about the legal fees in which you know your small business will not be able to meet up, so having liability insurance for your businesswill ensure that your business is totally covered if anything of such occurs. In other words, to be specific you need a public liability insurance and this will cover all legal fees, loss of earning repairs of damages or injuries and any other inconveniences that might have occurred to you or your business.

3 it helps you out when you are financially down or broke: this means that certain events or circumstances might occur at a time when you are not financially capable to cover up those expenses immediately but having a liability insurance cover for your business could put you out of this stress and worry.

4 Having confidence running your business: have you ever considered running your business in full confidence that no matter what happens you are covered as long as it relates with you, your business and your clients/customers! Then this is what public liability does to you and your business. Since you have taken up a cover for any circumstances that might occur in the cause of running your business then you are confident about running your business and carrying out your daily activities but that does not mean you should create avenue for people to get endangered in your business but rather when you do this you are actually killing your business by decreasing your business patronage, increasing your expenses. Have it in mind that an insurance which decides to cover up your cost is not done for free but on your premium which you pay monthly, quarterly, yearly, or whole sum whichever way you decide to.

5 This insurance policy can actually cover you for your business loan: if you have taken up a loan to help boost your business or clear debts whatever the case may be, you could actually run into bad debts in the cause of doing this, then you should take up a liability insurance for this purpose.

 For better understanding on this read “insurance as a tool for loan utilization”

TIPS: When taking up this type of coverage try as much as possible to go through all the benefits or advantages that is been stipulated in the policy and have a knowledge about it in order for you to measure it with your business needs depending on your activity but this kind of insurance policy should/must cover the above mentioned advantages and benefits which have been explained in this article.

Where there is an advantage, there should also be a disadvantage(s) even if not much, here are few disadvantage of this policy.

DISADVANTAGES OF TAKING UP LIABILITY INSURANCE FOR YOUR SMALL BUSINESS

1 Kind of activity(ies) involved in running your business: if you are the type of business person that involve in hazardous activities or communal action then this coverage will not over you of such.

2 Most times claims are slow because the insurance company needs to assess the damage and possibly determine the accurate and precise loss and this could take a long time and sometimes after all this the insurance company mat decide not to pay for the claims giving you reasons and excuses. (but you could file a case in court).

3 In general term, insurance is expensive and most times your small business may not b able to meet up with its premium.

4 Some insurance company only pays out money up to a certain amount after which you will have to pay the differences but there must be a payout eventually.

WHEN IS JUST NOT YET TIME TO TAKE UP LIABILITY INSURANCE FOR YOUR BUSINESS

So far so good we have talked about liability insurance for your small business, types, benefits, advantages, and also disadvantages, as we have seen in this article that there are a lot of benefits and advantages you could actually get if you take up a liability insurance for your small businessbut you also might want to consider the disadvantages as regards the cost of insurance, the type of activity you carryout in the cause of running your business and also method of payments of a claim but in essence all this should not discourage you as I can rightly tell you that taking up a liability coverage is very important for that your business. 

Irrespective of this “when is just not yet time to take up liability insurance for your small business” is what I will explain to you but why you should take up this liability insurance are the advantages and benefits which have been explained here.

1 Now, have you considered the income of your small business especially when you are still at the start up level or grassroots level, probably your business has not been generating much to start paying on huge premium for insurance coverage 

then taking up this coverage could directly or indirectly affect your business? So if you are at the beginner’s level then you might not want to consider an insurance policy just yet.

2 If your activities do not directly deal with clients/customers or you don’t closely come in contact with them then a liability insurance cover may just not be the right time.

Read also Third party insurance

3 I bet you most times you don’t want to go through the hassles of making a claim. Some insurance company can be pretty difficult when trying to payout a claim, so this could also discourage you from taking up a over.

4 Your business environment is also a factor that could help or force you to take up an insurance cover for your business, let’s say you have a quiet, calm, serene and easy going business environment where customers/clients are always careful and cautious of doing things then you might not just yet consider taking up a liability insurance cover but what happens if someone gets injured, or property damaged by you or your business activity and  claims are been made against you then you need a cover for it.

 In essence am saying that you might not want to take up liability insurance if you are familiar with your business type, people/customers/client very well and understand how your environment would work for you.

In conclusion, I would say try as much as possible to take up an insurance cover for your business, it is not necessary you take up the whole of liability insurance coverage but you could just study and understand what you need, dangers ahead in your business on people that’s your customers, property and employees and pick a specific liability insurance cover for your business and you should also take note of different insurance premium of different insurance company as it differs from state to state and country  by country and do your thorough research.

 We have listed some types of liability insurance cover and a link for better understanding that you could take for your business but if you didn’t get that, here is another types of  liability insurance and feel free to drop your comments on what you think about this article.

HOPE IT HAS HELPED YOU IN ONE WAY OR THE OTHER????

WHAT DOES THIRD PARTY INSURANCE REALLY MEAN

 THIRD PARTY INSURANCE | METHOD TO SAVE A THIRD PARTY

Third party insurance is a term used in insurance world and it is usually a third person involved in an insurance contract, yea that is the simplest form of third party insurance definition you can ever think of. In broader term we can say third party insurance is where an “Insured” which is the first party purchases a “liability insurance” from a second party which is the insurer (Insurance Company) for protection of another party called the third party for claims whether the insured (First party) is liable for its own damages or losses, whether it was caused by him/herself or the third party.

Third party insurance is a type of insurance that insures you for any death or injury on another person either it was caused by you or any person as long as your property was used on causing this damage.

This is how the third party insurance works:

1.     If you damage someone else’s car the insurance company covers the cost of repair or replacement of that car and not your car unless you take up a comprehensive cover for it.

2.    Third party liability coverage comes with a policy that covers you for claims by other car owners against you after the incident that i,s the insurance company takes up the cost by fixing or repairing the other car rather than fixing yours.

3.    The insurance company uses the money you paid for in your premiums to cover your cost and definitely if your premium is yet to be paid for a third party car insurance then there won’t be any compensation for it in case an accident occurs so you are left to cover out of your own pocket.

4.     An insurance company will save the stress of cost associated with accident assuring your car crashes on another person’s car or you injure a pedestrian; the insurance company will cover for damage or medical bills whatever is the case and more also if in the case of injuring a pedestrian then the insurance company will save you off being apart by the family members of the injured pedestrian.

      

5.    An insurance company comes up when you think everything is crashing on you. The greatest thing that can happen to anyone is when you find yourself in trouble and someone just came to rescue and take off the burden. And that is what an insurance company does, they serve as a quick recovery of any accident or bad event you find yourself.

      Having an idea of how insurance company works is not only what is necessary. You also need to know how the third party insurance cover works which have been explained above.

      But most people do not have an idea on how to make a claim after an accident and they allow the injured person or victim to take advantage of them. Am gonna quickly give a rundown of information you must put together after an accident:

      First of all, you need to contact your insurance company and give them a brief information/summary of the incident and they should include:

1) The exact date and time in which the accident occurred and if there was any unfavorable weather conditions.

2)  Source out for information of the affected person or car (Know if the person was registered in an insurance company or not)

3) There should be a detailed information of the driver or passengers, if there was any injury or damages to the car or property in the time of the accident.

4) You should be able to take exact photos of the injured or affected person is trying to add up the cost

5)  Check if there was any witness at the event and get every details about the witness.

NOTE: be intelligent enough to know when you are at fault in an accident event, it perhaps you weren't at fault you could make a claim for damages and person’s insurance company will cover up for your cost like injury compensation or repairs.

THE LAPSES AND INEFFECTIVENESS OF THE NIGERIAN INSURANCE INDUSTRY | CAUSES AND SOLUTIONS

REASONS WHY INSURANCE IS NOT  YET APPRECIATED IN NIGERIA

INTRODUCTION: Nigeria is a big country and the most populated black African nation with about 150 million people living within the country, with all of its natural resources, I can tell you Nigeria is a blessed country and should be an eye opening for other African countries but do I need to shock you that as big as Nigeria, she is lacking behind in so many prosperous areas that would have been a source of wealth and national development to the country. What am I saying in essence is that Nigeria is gifted in so many areas and I can boldly tell you that the country  is lacking in so many areas because of its political system and the mindset of the people which had narrowed them to the extent that relevant things have become irrelevant thereby causing damage to the nation at large both politically, economically, in safety and business wise….okay enough of the stories, we are here to discuss on the lapses of the insurance industry in Nigeria and why insurance is not been appreciated in the country even though its regarded as the giant of Africa.

POPULATION: Nigeria is a country that would flourish independently in the insurance industry because of its massive population and the wealth of 65% of Nigerians is a very good start to the development and appreciation of insurance industry, the citizens do not appreciate the industry but what do we have; a neglect to the industry due t certain factors which has led to the feeling of its irrelevancy in the country. Talking about United Kingdom and the US, insurance is an industry which is going stronger and they have a vast population which created a rapid increase and buoyancy in the industry. Infact in his countries it is mandatory that every individual to have a health insurance cover and every driver to posse a car insurance cover if you really want to drive on the road and imagine the population of these countries if every driver is to take up health and car insurance cover, tell me why the industry should not blossom.

INSURANCE: We have been talking about insurance all the way, okay let’s say a novice visited this page and wants to really know what Insurance is all about. Insurance is a kind of contract you “the insured” enter with another party called the “insurer” which is the insurance company through a fee called a premium and when such events occur, the insurance company indemnifies you of the benefit or to your beneficiary depending on the policy you op in for. There could be another person usually an agent or a broker who stand as an intermediary between you and the insurance company….An Insurance broker works for different insurance company depending on your quest while the insurance agent stands for a particular insurance company referring a client to only the insurance company he/she works. 

For example if you take up a life insurance policy this is saying that you actually want to insure your life and family or one of the many life insurance policies…..

You could check different life insurance policies here or you could take up take up a car insurance policy to insure your car against accident, incidents like bodily scratch or causing damage against another, when any of these occur, the insurance company will take up the coverage for you depending on the policy agreement and based on your premium

Read about Liability Insurance here

Having brief about what insurance is, lets now talk about the types of insurance that is compulsory and commonly practiced in the Nigeria system and they are:

1 Occupiers Liability Insurance

2 Health care Professional Indemnity Insurance

3 Builders Liability Insurance

4 Motor third party liability insurance

5 Employers Liability Insurance

6 Employers liability Insurance (Group Life)

1 Occupiers liability Insurance: this is an insurance policy mandated by law for the owners and occupiers of public buildings used as residents, offices, filling stations, hostels e.t.c. Compensation is paid to the business users and members of the public in case of natural disasters, death or building collapse.

2 Health care professional insurance: this is mandatory for all medical professionals, institutions and centers to buy. The institution is to register under the National HealthInsurance Scheme (NHIS) and compensation is provided under this scheme and failure to comply will result in the revocation of the permit of the medical institution and also the offender will be charged for involuntary minder.

3 Builders Liability Insurance: This policy is compulsory for contractors and owners of buildings higher than two floors. This is just to provide for their workers in case of building collapse, injury and death at the construction site. Failure to comply attracts a penalty of #250,000; three years jail term sealing and demolition of the affected building.

4 Motor third party liability Insurance: This policy is made compulsory for car owners and drivers of vehicles, motorcycles and special types of vehicles (both private and commercial) and this covers against death, damage to property or bodily injury of a third party.

Read third party insurance

The life cover is unlimited while the property damage is #i million and the penalty for failure to comply is #250,000 or one year imprisonment or even both.

5 Employers liability insurance this kind of policy is targeted at employers and requires them to have insurance that will provide compensation for their workers in the event of injury illness or death in the course of the employment. For employees that fail to comply the penalty is #250,000 and sealing of the employers business premise.

6 Employers liability insurance (group life): employers with staff strength that’s greater than four are mandated by law to buy into this policy. The law cuts across both public and private employers and under this law they are required to pay for pension subsidy in the event of mental or physical disability or disappearance while in service

OTHER TYPES OF INSURANCE PRACTICED IN NIGERIA

Home content insurance

Few people actually realize what the total value of one’s home content truly calculates to. Just to name one example is that of the window coverings such as curtains or blinds as that alone is costly, not even to mention carpets and/or bedding. If one actually has to add every single item in one’s home up, the total value would undeniably come as a huge surprise. However, it is highly advisable to do just that to determine the closest estimated value, thereby ensuring that you are not over or underinsured. Why would you want to insure every single item in your home? To safeguard yourself financially against losses due to fire, flood, burst geyser or an earthquake.

Property insurance

It is mandatory to insure one’s property for the estimated value, if it is financed. No person/entity will ever receive a home loan without sufficient property insurance.

Vehicle insurance

Vehicle insurance is also enforceable by law if a vehicle is financed.

Why Would You Insure Your Assets?

Why would anyone concern themselves with the variety of insurance types available to them if they happen to believe it to be a waste of hard earned money and just not a justifiable expense?

For example, why would anyone spend even one cent on life insurance of they have no intention of dying anytime soon? After all, life insurance is for the elderly, is it not?

And why on earth would one insure a vehicle if he/she is a good responsible driver who has never had a vehicle collision ever before? Why waste money on vehicle insurance?

And what about home insurance, surely that is a huge waste of money especially if one has the best security systems and features in place to protect all valuables?

Why would a builder spend his/her hard earned money on monthly insurance premiums if he/she is fully qualified in the field, and has never caused damage to anyone’s property or equipment before? Why would he/she then lessen the profits by adding an extra worthless monthly expense such as a builder’s insurance premium?

Why would anyone on earth waste money on an unemployed insurance policy if he/she is in permanent employment and has been for years.

All of the above might seem realistic and true, but only for those who live in a perfect world without crime, natural disasters and unforeseen events. If one takes one natural disaster such as a fire as an example, it will automatically give justifiable reasons to all of the above and confirm the necessity of insurance rather than a waste of money.

And yes, life insurance might not be to your immediate benefit now, but accidents do happen, and should anything happen to you, you will at least have ensured that your loved ones are not burdened with your funeral costs, debts etc.

And even though you might be a responsible good driver, another vehicle driver might not be and collide into your vehicle by accident. This is why vehicle insurance is of such importance to have, so much so that it is enforceable by law in many instances.

TYPES OF INSURANCE COMPANIES IN NIGERIA

1 Consolidated Hallmark Insurance Plc

4, Eziukwu Road, Aba, Abia Nigeria+234 818 000 1164, +234 818 000 1163, 082 223216
Consolidated Hallmark Insurance Plc services includes bonds insurance, burglary insurance, fire & special perils, all risks insurance and home insurance, professional indemnity and lots more.


2 FBN Insurance

34, Marina, Lagos Island, Lagos, Nigeria 0709 812 3827, 0808 047 9319, 01 905 4364
FBN Insurance is a Lagos based financial service outlet for vehicle, fire and corporate insurance services.


3 Great Nigeria Insurance Plc
8 Omo Osagie Street, South West Ikoyi, Lagos, Nigeria 08052601713, 01 342 9161
Great Nigeria Insurance PLC offers financial services on fire and special perils insurance services.


4 Guinea Insurance Plc
33 Ikorodu Road, Jibowu, Lagos+234 1 293 4575, +234 1 293 4577
Guinea Insurance Plc is an insurance services provider in Nigeria.


5 Industrial & General Insurance Plc
Plot 741, Adeola Hopewell Street, Victoria Island, Lagos Nigeria 08033049507, 01 2918854, 01 2918853
Industrial & General Insurance Plc (IGI) offers life and non life insurance products.


6 Law Union & Rock Insurance Plc
Law union House 14 Hughes Avenue, Alagomeji Yaba, Lagos, Nigeria01 454 0071, 01 454 0074, 01 454 0075
Law Union & Rock Insurance Plc is one of the leading insurance company in Nigeria.


7 Mutual Benefits Assurance Plc
Rainbow Tower, Kilometer 127, Idiroko Rd. Near NNPC Filling Station, Ota, Ogun State Nigeria+234 803 431 8658
Mutual Benefits Assurance Plc is one of the leading insurance companies in Nigeria providing excellent services in general business claim and life assurance.


8 NICON Insurance Plc
Nicon Plaza, Plot 242, Muhammadu Buhari Way, Central Business District, Abuja FCT Nigeria+234 809 504 1234, +234 805 508 4597
NICON Insurance Plc is a Nigerian service financial insurance foremost corporation.


9 Niger Insurance Plc
48/50, Odunlami Street, Lagos Island, Lagos 0803 308 5970, 01-894 7226, 01-872 0344
Niger Insurance Plc transacts all classes of Insurance business and offers a wide range of innovative and customer-oriented products and services.


10 Nigeria Deposit Insurance Corporation
Plot 447/448 Constitution Avenue Central Business District, Garki, Abuja, Nigeria 09 460 1380 - 9
NDIC is an independent agency of the Federal Government of Nigeria to protect depositors and guarantee prompt and efficient settlement of insured funds in the event of failure of insured participating institutions.


11 Nigerian Insurers Association
42, Saka Tinubu Street, Opposite Eletu Ogabi Street, Victoria Island, Lagos Nigeria 0818 887 7140, 0701 178 4884, 0803 040 080401 804 3840
Nigerian Insurers Association was established to protect & advance the common interests of Insurers in Nigeria by creating and sustaining a positive image for the Insurance industry.


12 Regency Alliance Insurance Plc
2 Ebun Street, Gbagada Expressway Phase 1, Gbagada, Lagos, Nigeria 0805 349 9070, 0805 349 9074, 0809 765 65460814 323 3727
Regency Alliance Insurance Plc offers risk underwriting and risk management services.


13 Sovereign Trust Insurance Plc
35 Adetokunbo Ademola Street, Victoria Island, Lagos, Nigeria 01 262 3940, 01-261 9011
Sovereign Trust Insurance Plc offers insurance protection and risk management services in Nigeria.


14 Sterling Assurance Nigeria Ltd
1st Floor, Union Bank Building (4th floor), 37, Niger Street, Kano, Kano State+234 805 769 6098, +234 803 450 9093
Sterling Assurance Nigeria Limited provides services in fire and peril insurance, motor and money insurance, plant and machinery all risk, and more.


15 WAPIC Insurance Plc
No 119 Awolowo Road, Falomo Ikoyi, Lagos, Nigeria 070034592742, 01 277 4500, 01 277 4555
WAPIC Insurance Plc is offering a comprehensive range of insurance coverage.


16 Zenith General Insurance
Plot 280a, Ajose Adeogun Street, Victoria Island, Lagos, Nigeria 01 278 3421, 01 270 100401 461 3705
Zenith General Insurance is a Nigerian insurance service company for aviation, marine and risk management services.

Others here: Insurance companies in Nigeria 

LAPSES AND INEFFECTIVENESS OF INSURANCE IN NIGERIA

There are a lot of causes to the lapses and ineffectiveness of insurance in Nigeria and this lapses have eaten deep to the extent that it has made insurance as god as not existing. It will take a very persistent and mobilized set of insurance professionals to revitalized and rebuild the pot-holes in the insurance world. Its sad that majority of Nigerians do not really 

understand what insurance is all about not to talk of hoe it works , some mistake insurance for a banking industry performing the same activity of savings, deposit loans and transfers and other banking functions, in this cause we shall b discussing about the lapses and ineffectiveness of the insurance industry in Nigeria and suggested solutions without wasting much time let’s talk about some of these factors and the suggested solutions I mean is more disappointing that as civilized as the world is and more also as civilized as the people of Nigerians are, they seem not to understand and fully take part in the insurance industry and this makes it look dead and inefficient but have you considered the reason for this “ I guess not” and here is few!!!

Corruption I would say has eaten deep into the system; I would not be going in-depth of corruption in Nigeria, as we all know that corruption in Nigeria is the order of the day from the head to the least person on the street. Corruption is mostly effective in the areas where it has to do with finance where people sort out ways to embezzle funds and actually deceive the people to get what they want, now how does this corruption affects the insurance industry in Nigeria. In a situation where someone is caught on the road without an insurance coverage whatsoever and what should be put in place? 

The system should be that when such person is caught he/she should be  taken to court and tried but in Nigeria, the police will prefer settle out of court notice after collecting its share of the offense charge and therefore the at-fault party is free to parade the streets without having the insurance coverage in the case of car insurance and what is the cause of this , the economy and political system deeply affect the industry and has made it difficult for the masses that they seek other cheap measures to make money fast if the economy and political system are doing great, such things would not occur infact the policy of compulsory insurance policy would be put in place and effective.

Another thing I would like to point out is the fact that most of this insurance company, broker, or agents are all up and ready seeking different means to profit out of nothing from those who show interest in carrying out an insurance policy. I was with a client and he was explaining to me how he was scammed by an insurance agent, this type of instances can make a person choose not to involve his/her finance in something that will not profit him/her at the long run. I think a principle should be put in place and a strong law backing and enforcing these principles in order to curb out this evil men in the insurance industry for it to work effectively. 

Imagine an insurance company which could not meet up with claims made when they are due to but yet refuse to handover its certificate to National insurance commission (NAICOM) , this is what  we are really saying, when the mindset of the people in the industry are filled with evil thoughts to scam clients why will the followers not do same. But this companies about to wind up will still stay put hoping that something good will happen and that there will be a revitalization of their company and what measures or actions are been taken or put in place to prevent this from happening but none and they hope it just happens.

If majority of the clients are complaining of unpaid claims what would be their testimony, definitely it wouldn’t be a testimony that would encourage others to participate into the program so among the suggested solution should be that this deceit and ineffectiveness should be wiped out starting from the insurance industry itself.

Another major cause is lack of awareness, in a situation where their the people don’t even know what insurance is about as we have mentioned above, that alone can eat deep into the system negatively and infact lack of awareness is lack of its existence…We can vividly see adverts for commercial products, these companies spend so much on advertising in order to create awareness of a certain product and thereby creating awareness of the general product for example: if  Coca-cola company makes an advert for one of their new product, by so doing they are also creating awareness for the general products and the company itself while that particular product gets the highest awareness because it is targeted, this can also be applied to the insurance industry. An insurance company could decide to run an advert for its cheap quote and offer discount on them and by this means it is also creating awareness of the insurance company in general and what they really do.

In The Nigerian system we sort for cheaper ways to do things, well some people could blame it on the substandard economy of the country, some will say they barely feed well come to talk of insuring properties, so the economy of the country plays a vital role, but the cheapest ways aren’t always the best to do things and could affect in the long run. We prefer handling situations with quarrels and fights incase of an accident or collision when making a claim on the at-fault party. We prefer to dig up the situation immediately and right there at the accident rather than making a claim which in turn leads to quarrel and fight, so in essence maturity speaks and only the matured minds acts maturely. If we have to talk about the security agents are playing heavily to the downfall of this system where they only seek in the areas that will fill their pockets and worry less on how things should be done appropriately.

National Insurance Commission (NAICOM) as the sole registrar and licensing of the insurance companies in Nigeria should also play vital role in the coordinating and supervising of these insurance companies, agents and brokers to ensure things are done appropriately  following its standard and their functions if been put to place and strictly adhere to, should lead to a better insurance industry. I will highlighting some of the functions of NAICOM and with that you should critically examine what areas are not been put in place couple with some of the weakness mentioned above and in that way we will put heads together to make the insurance industry grow rather than declining. 

The functions include:

1 Approve rates of insurance premiums to be paid in respect of all classes of insurance business

2 Encourage adequate protection of strategic government assets and other prospectus

3 Provide safe and stable standards for the conduct of insurance business in Nigeria

4 Approve rates and commission to be paid in respect of all classes of insurance business

5 Regulate transactions between insurers and re-insurers in Nigeria and also those outside Nigeria.

6 Act as adviser to the federal government on all insurance related matters.

7 Approve standards, conditions and warranties applicable to all classes of insurance contracts.

8 Publish for sale and distribution to the public, annual reports and statistics on the insurance industry

9 Liaise with and advise federal ministries, extra ministerial departments, statutory bodies and other government agencies on all matters relating to insurance contained in any technical agreements to which Nigeria is a signatory.

10 Contribute to the educational programmes of the Chartered Insurance Institute of Nigeria and the West African Insurance Institute and also

11Carryout such other activities connected or incidental to its other functions under their decree…

Having analyzed the functions of NAICOM in Nigeria we could strategically and carefully examine each of these functions and grow are they are been put in place in order to curb corruptions and make the insurance system grow bigger and better if the head is not performing its duties with cross supervision that’s where it gives the members of the body an opportunity to start misbehaving and this will definitely lead to corruption (scam, deceit and embezzlement) and what impression is been created in the face of clients or those who don’t have knowledge of what insurance is all about, so we must ensure things are done the right way and insurance will be appreciated just as it happens in the 1^st-tier countries like USA, UK, Canada, and others

So what do you have to say about this?? Your contribution and suggestions will be highly appreciated….

Drop comments below…..