Saving through Insurance

How You Can Use Insurance as a Saving Tool

Though insurance policies are instrumental in protecting your investments/assets from any unforeseen risks or disasters (like loss of a job, theft,  death of breadwinner, fire outbreak,  accident, severe illness or retrenchment), many people avoid them not knowing the dire consequences of such a decision.

5 critical questions of great concern:

1. What is insurance all about? 

2. Why do people dislike the idea of taking insurance? 

3. Are insurance policies necessary?

4. What kind of insurance do I need? 

5. What do I need to look out for when taking insurance? 

1. What is insurance?

It is a financial product you buy to protect  yourself (your life, family, business,  property and other investments) from losing money or income. An insurance policy is a formal contract in which an individual or entity receives financial protection against losses or unforeseen risks. 

2. Why do some people detest the idea of insurance?

The subject of insurance is highly emotive and often misunderstood due certain misconceptions/myths as stated below.

i. Insurance companies are unscrupulous and that they steal from the public. 

ii. Insurance policies are meant for the rich. 

iii. They are meant for those who own vehicles or big businesses.

iv. You can neither make money nor save through insurance. 

v. Taking a life cover against sickness or accident is ungodly. 

3. Are insurance policies necessary?

Yes they are. You need carry out due diligence,  learn the do's and don't's as well as the facts that can help you deconstruct the general misunderstanding about insurance. 

Facts about insurance

1. Insurance companies are regulated by the Insurance Regulatory Authority (IRA) which handles all sorts of complaints from clients. 

2. Everybody needs insurance; hence,  it isn't a preserve of the rich,  vehicle owners or big business owners. 

3. You don't take insurance when you need it,  you take it when you don't need it. 

4.It helps you protect your valuable assets and loved ones. 

5. It is a way of diversifying your investments for capital growth and grants you a tax relief. 

6. Offers access to personal loans. 

7. Reduces your legal liability or risk by transferring it to an insurance company for coverage and protection. 

4. What kind of insurance policies do I need?

It depends on your needs,  age,  size of your family, level of income or investment etc. 

5. What do I need to look out for when taking up an insurance policy?

i. Conducting a market survey of the policies offered by various companies.

ii. Check the term limits of the policy in question. 

iii. Understand what exactly you're covered for and its benefits.

iv. Find out the documents to be given to you. 

v. Understand the pre-existing conditions in case of a life cover.

vi. Read all the details in the policy document and ask questions where you don't understand.

vii. Know your rights and privileges.

N.B. Insurance companies offer various products, besides covers against risks, such as unit trusts for saving and investment. Insurance, therefore,  is a unique way of saving your money.

In sum,  insurance policies are very essential to all persons. Re-evaluate your insurance policy yearly to factor in any changes taking place. Insurance policies take two main forms: short-term and long-term. Short-term insurance lasts for a year or less and is usually taken for protection of individuals or possessions e.g. health cover,  personal cover,  or general liability insurance. Long-term insurance lasts for up to 20 years or a life time  and it covers life-changing events like death,  disability and retirement. 

Task

 If you haven't taken up any insurance policy, re-examine the reasons for such a decision and take action as soon as possible. Let's share our thoughts about insurance!