Just after 9 pm on this fateful Friday night, a fire broke out, destroying the entire building before the arrival of the fire service. The scene was so tragic that the only items salvaged were the clothes on them. The event unfolded so rapidly that a 78-year-old man watched his life’s investments turn to ashes. Thankfully, compassionate Nigerians, neighbors, family, and friends rallied around them, providing shelter and clothing for the night. Wondering why the fire service always arrive after the deed has been done? That’s a story for another day.
This recounts the ordeal of a retired civil servant a few years back. The man happens to be a long-time client of mine. He had insured his home against fire and special perils for ā¦70 million, with an annual premium just under ā¦100,000. The house was built in his late 40s and refurbished tastefully just before retiring at age 60.
Upon retirement, he sought to reduce his premium, which the insurance company obliged, due to his no-claims history. However, five years after paying a discounted premium, he decided to cancel his insurance cover, citing retirement with significantly reduced income as his reason. His insurer generously offered a one-year free coverage as appreciation and recognition for his 25 years of loyalty and patronage, which he accepted and continued for one more year. Upon the expiration of the free cover, he decided not to renew. His insurance company approached him again, offering a flexible payment plan, but none appealed to him, and was left to follow his heart.
Living in the same estate with him, I rushed to his house to see the situation for myself and to offer sympathy to the family. His looks were pitiable staring lost into space. Some familiar faces, upon seeing me, approached to inquire, ‘What will insurance do?’ while others questioned if the building was insured. Seriously! I thought to myself. I hadn’t realized the extent of Nigerians’ trust in insurance until that moment. How true the saying, ‘Insurance is what you buy when you donāt need it and regret not buying when you need it.
Insurance is undeniably a lifeline as life offers no guarantees. No amount of calculations or permutations can foresee what the future holds for anyone. Insurance offers peace of mind to the insured. It’s always better to insure than be sorry.
Regrettably, many seniors’ retirement homes, like the old man’s, are uninsured, due to same reason of inadequate income for premiums payment. Hmm, A word is enough for the wise.
However, thinking loud I will urge financial institutions to consider this group of people and develop products that support their needs, such as fund for insurance premium payments so to safeguard their life investments against unforeseen events. This could be devastating for them and their families. Planning well and in advance for this life stage is also prudent. Many still assume their children will care for them in old age. Whilst it’s not wrong or out of place to expect support from children, after all you invested in their lives, but the reality is that they may not be well positioned to cater for all your needs especially with respect to unexpected disaster. This is why insurance is the most reliable safety net while you still earn an income. The insurance market offers various insurance products to secure you against the unexpected at retirement.
Another strategy is to voluntarily increase your pension contributions beyond the statutory requirement when your income rises, rather than elevating your lifestyle to match or exceed the increase. It’s wise to save for the rainy day to avoid becoming a burden to your children in old age.
Before concluding on this, let me revisit Baba’s story post-fire incident. Baba and his wife, after a three-month stay with relatives, relocated to the village. Fortunately, they had a village home to return to. What about you? Do you have a village home to fall back on? Many donāt have a village to return to because they have either embraced Lagos or Lagos embraced them as indigenes. This serves as a wake-up call for those who have neglected their village homes. It might be the only lifeline if you fail to insure your Lagos home. Sounds humorous? It’s far from a joke. Let’s act wisely and make hay while the sun shines. Once more, I say, a word to the wise is enough.
Someone reading might be wondering what insurance is about and its workings.
Wikipedia describes Insurance as a means of protection from financial loss where, for a fee, one party agrees to compensate another in the event of certain losses, damages, or injuries. It’s a form of risk management, mainly used to hedge against the risk of a contingent or uncertain loss.
Indeed, this is accurate, but it might be too lengthy and complex for the average person.
Hence, for sake of simplicity, which this blog strives to deliver, I’ll define insurance as simply a financial safety net or cushion. Imagine someone falling from a great height, with a net or cushion placed below. Clearly, any injuries would be greatly reduced by the net or cushion, unlike hitting the solid hard ground, which could be deadly. Therefore, insurance can be rightly described as a financial safety net, as its benefits are quantified in monetary terms.
How it works:
- It’s a Contract: Insurance is an agreement between you (the policyholder) and an insurer (the insurance company). As a legal contract, it’s enforceable by law and, like any other contract, it’s bound by agreed terms and conditions and can also be vitiated when there is a breach of same.
- Insurance involves premium payment: You pay a fee, known as a premium, and in return, the insurance company agrees to compensate you in the event of misfortune. The premium payment activates the insurance contract. Without it, the insurance company has no legal obligation to provide coverage or pay claims. Section 50-(1) of the Insurance Act 2003 states that the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance
Always ensure your premium is paid promptly to keep your insurance contract validated.
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- It offers protection against losses: In the event of a fire in your home, the insurance company would cover the rebuilding costs. Similarly, life assurance provides a death benefit to your beneficiaries.
- Risk pooling: Risk pooling involves insurance companies gathering small amounts of money from many individuals to cover claims that far exceed the premium collected from an individual policyholder. This fund, which is also invested, is utilized to pay claims arising from accidents or unexpected events. By distributing the risk among many people, it becomes manageable and affordable for all. This system explains why, even after years of paying premiums without filing a claim, insurers do not return all or a portion of the premiums to the insured. Premiums are deposited into a collective pool used to pay the claims of those affected, and not from an individual claimant’s premium. I state this to answer the question some may have with regards the incident narrated above. Why canāt his insurance company pay for the fire incidence having collected premium from the man for years without a claim? Claims are paid from the pool. He may not have claimed for years but others in the pool have certainly claimed.
- Types of insurance: There are various types of insurance, from life to non-life, including group life, health, motor, fire, theft, homeowner, personal accident, etc.
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Dear Friends, let’s discuss this real-life narrative. Is the elderly man at fault, or has he been unfairly treated by his insurance company? Or should we conclude that āNigeria happened to himā? What are your thoughts on the story and what could have been handled differently? Your insights with justifications are welcome, so we may all gain from the exchange.
Watch out for a comparable story titled ‘The Ibadan Black Day’ in my upcoming post.
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Stay connected.
@theinsuranceguarantor
I can relate with story. I remember , I insured my stores for 3 years without claims. 2020, my fire & burglary insurance expired in September, End SARS started and one of the store was looted, in fact it was emptied . I couldnāt make any claim, because my insurance had expired few weeks before the incident . I felt really bad because, Iāve paid for many years without claim. Because of that, I set a calendar reminder on my phone, to remind me few days before the expiry date.
Thanks Tayo for taking time to read and your feedback appreciated. I am encouraged. I am sorry for your loss during Endsars. I still remember the case. Glad that you have taken proactive steps to avoid a reoccurrence. I plan to do a story on Endsars brouhaha sometime soon. Please stay connected for the next episode.
Thank you for the enlightenment and sensitisation
Thanks Friendship mi for taking time to read. I am encouraged. Kindly stay connected for the next episode.
Congratulations on this effort at taking insurance to another level . More grease to your elbow . God be with you .
Thankyou sir and Amen to the prayers. I am encouraged. God bless you sir. Kindly stay connected for the next episode.
Very enlightening i must say, Iām taking
Thank Temi. I appreciate. Stay connected for the next episode.
I wouldnāt really blame baba, it was an unforeseen event but also itās better safe than sorry.
Thanks Temi for taking time to read. I am really encouraged. I absolutely agree with you. Baba obviously believed in insurance, but lack of funds prevented him. Many thanks again for your comment.
Useful tips. Thanks for sharing
Thank you, Pastor. I am happy you created time to read. I am really encouraged, Stay connected for the next episode.
I will surely watch out for the next episode.
Wise counsel. Thanks for this.
Thanks Tunde. I’m happy you created time to read and glad you found the story useful. Please stay connected for the next episode.
Well, as rightly described. “better insure than be sorry”. Insurance is just a piece of paper called policy document as at time of purchase until the unexpected happens, then you will understand the gravity of that paper.
This is an unfortunate story for the old man having spent so much on insurance for years but no more cover when the need arises.
Benzo, Thanks so much for reading. I appreciate your comment. God bless you. Stay tuned for the next episode and help to share across your social media platforms. The next episode will be released shortly.
Thanks very much ma, for this educative blog. God bless you richly. Am looking forward to more insightful episodes.
Thanks Aburo for taking time to read. I’m really encouraged. The next episode is coming shortly. Many thanks
Quite educative and insightful.
Great work indeed
Thank you, my darling sister. I am truly humbled by the number of people who took time to read to the end. I am greatly encouraged. Stay connected for the next episode. I look forward to your insurance renewal upon its expiration.
Lovely read, it will be interesting to see financial institutions develop packages tailored to suit the class of people in Baba’s category who are no longer active earners and still want to guard against unforseen losses.
This is enlightening and forward thinking I wish you the best in future posts
Thank you, Lola. Indeed, financial institutions must take initiative. There’s a notable funding gap affecting this class of people, and a tailor-made financial product could be the solution they need. I appreciate your input. Please continue to connect and share this message across your social networks. It might just help someone in need.
Congratulations ore mi. Well done! šš½
Thank you, Ore. Please stay connected for the next episode and share this on all your social media platforms. It could help prevent someone from facing an imminent disaster. Remember, no one is immune to risks. Many thanks once more. Your encouragement means a lot.
An eye-opener and educative! Keep up the good work madam
Thank you, my dear brother. Your time spent reading is greatly appreciated. I am truly encouraged. God bless you. Stay connected for the next episode.
Sadly, a lot of Nigerians do not invest in insurance as some see it as a waste in allocating their funds without knowing that it is also a financial coverage from unforeseen circumstances like what Baba faced.
Thank you, Shade, for your comment. You are absolutely right. Insurance is often viewed as unnecessary by those who fail to recognize its value. Having witnessed significant losses due to disasters, I was compelled to raise awareness about the benefits of transferring risk to insurance. The story ‘better insure than be sorry’ is a true-life incident that happened in your estate years ago when we were living there. There’s really no need to live with risk when we have the option to transfer it. I hope that this initiative will fulfill its purpose of enlightening the public over time. Many thanks again for taking time to read. I am encouraged and make sure you insure your house if you haven’tš.
Very enlightening
Thanks so much for taking time to read. I am encouraged.
Very enlightening
Thanks. I appreciate. Stay tuned for the next episode.
This is a great start Folake. I will be reading regularly.
Thanks AKD. I give it to you. You made it happen this soon. I appreciate and glad you will be reading. I’m encouraged. Thanks again.
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