If Inflation Were a Person, Would You Insure It?

Customer: “Why should I bother renewing my insurance policy this year? Have you not seen the fuel prices lately? Between that and the constant scarcity, everything has doubled! Insurance is the last thing on my mind right now”.

Insurance Representative: “I hear you, sir. Times are tough for everyone, and the fuel price increase has made it even harder to balance expenses. But think about it, if something unexpected happens, whether it’s a car accident, a health emergency, or even a fire at home, having that insurance could mean the difference between a small setback and a financial disaster. Let’s talk about how we can adjust your coverage to keep you protected without stretching your budget.”

Customer: “Well, that’s easy for you to say! I’m just trying to keep my head above water here, and insurance feels like a luxury I can’t afford right now.”

Insurance Representative: “I get it, but what if I told you there are flexible options that might actually make it easier to manage? Even during inflation, insurance can be a valuable tool to protect what you’ve worked so hard for. Let me explain how…”

These are common conversations going on with rising fuel prices, inflation, and economic hardship. Many feel insurance is an expense they simply cannot afford, but in reality, insurance can serve as a crucial buffer, offering stability when unexpected events happen. Here is why maintaining some level of insurance coverage, could be one of the smartest decisions you will ever make. Here’s why insurance is more relevant than ever, and how it can be a lifeline in a time of uncertainty.

The Role of Insurance in Financial Stability

Insurance is more than just a safety net, it is a tool for maintaining financial stability when things go wrong. While it’s tempting to cut out insurance costs when money is tight, this can leave families and businesses vulnerable to even greater financial strain when unexpected events occur. Here’s why maintaining insurance coverage, even during tough times, can make a significant difference:

• Shields Against Unforeseen Expenses: In times of inflation, the costs of repairs, replacements, or medical treatments can skyrocket. Insurance ensures that these expenses don’t become an overwhelming burden. For example, if your vehicle is involved in an accident or your home suffers damage from a fire or flood, having insurance means you won’t have to bear the full cost out of pocket, which could be far more expensive than the premiums you pay.
• Protects Business Continuity: Small businesses have been especially hard-hit by inflation, with rising costs eating into their already tight profit margins. For business owners, insurance can provide critical support in keeping operations running. Business interruption insurance, for example, can help cover lost income if a natural disaster, fire, or other covered events disrupt your business. This can be a lifeline, allowing you to recover without exhausting your savings or taking a loan.

Real-Life Cases: When Insurance Made the Difference

To understand the importance of insurance in tough economic times, let’s look at a few cases where insurance played a critical role:

1. The Lagos Flood of 2023: Property Insurance Saves Homeowners from Financial Ruin

Last year, heavy rains led to devastating floods in parts of Lagos, causing significant damage to homes and businesses. While many homeowners had to shoulder the cost of repairs themselves, those with property insurance found relief in the form of claims payouts that helped them rebuild. For example, a family in Lekki who had their home insured received enough compensation to repair their damaged property and replace lost furniture. Without this coverage, they would have had to deplete their savings or take on a loan, further straining their finances.

2. Medical Emergencies: Health Insurance as a Lifesaver

With healthcare costs rising, a medical emergency can quickly become a financial crisis, especially for families already stretched thin. Consider the case of Mr. Adewale, a civil servant in Abuja, whose wife required surgery after an unexpected medical condition. Thanks to his health insurance, which covered a significant portion of the medical bills, he avoided sinking into debt. Without insurance, he would have faced a bill that was several times his monthly salary, an expense that could have devastated his family’s financial stability.

Why Cancelling Insurance Could Be a Risky Move

During periods of economic hardship, it’s understandable that many are tempted to cut back on expenses. However, canceling insurance could lead to greater financial vulnerability in the long run. Here’s why:

• Higher Costs Without Coverage: If you cancel your car insurance to save on premiums, you may be able to save a bit in the short term. But consider the long-term risk: a single accident could lead to repair costs that are far higher than the premiums you would have paid. This could put a significant strain on your finances, especially when inflation is already making everything more expensive.
• Limited Access to Loans Without Insurance: Insurance can also serve as a form of financial credibility. For example, banks are more likely to extend credit or loans to businesses and individuals with insurance coverage. Without it, you might struggle to access the financial resources you need during a crisis, which could further compound your difficulties in an inflationary environment.

How Insurers Are Adapting to Meet Your Needs

Recognizing the pressures of inflation, Insurance companies are already taking steps to make coverage more affordable and accessible, aiming to ensure that you don’t have to choose between protecting yourself and meeting daily expenses. Some of these efforts include:

• Flexible Payment Plans: Many insurers are now offering monthly or quarterly premium payment options, allowing you to spread out the cost of coverage. This makes it easier to keep essential insurance in place without feeling the strain of a bulk annual payment.
• Micro-Insurance Products: For those on tight budgets, micro-insurance offers tailor-made coverage for specific risks at a lower cost. For example, personal accident coverage or basic health insurance can be purchased at reduced premiums, providing peace of mind without breaking the bank.
• Discounts for Loyalty and Bundling: Some insurers offer discounts for bundling multiple policies or for renewing coverage without lapses. If you’ve been with an insurer for a long time, it may be worth asking about loyalty discounts that could help reduce your premiums.

Looking Ahead: Insurance as a Strategic Investment

While inflation has made budgeting more difficult for many, insurance should be seen as a strategic investment rather than just another expense. It’s a way to safeguard your progress and protect the assets you’ve worked so hard to build. As we navigate these challenging economic times, maintaining some form of insurance could be the difference between a manageable setback and a financial catastrophe.

Conclusion:

Rethink Your Insurance Today

If you’ve been considering dropping your insurance coverage, now might be the time to have a conversation with your insurer about options that fit your current budget. Ask about lower-cost plans, flexible payment options, or ways to adjust your coverage to meet your most pressing needs. By maintaining even basic coverage, you can protect yourself and your family against unexpected financial shocks in times of inflation and economic uncertainty.

Call to Action:

Protect What Matters. It is Easier Than You Think!

Before you decide to cancel that policy or let it expire, why not give me a call?  Our partnership begins here. Feel free to ask any insurance-related questions or share any concerns you might have on this topic. Do stay tuned for the next episode. It promises to be enlightening.