Life is full of uncertainty especially in Nigeria, with large segments of the population living below the poverty line and, fraught with money worries.
Most Nigerians work extremely hard all their lives to protect and provide for their families. As such, it doesn’t make sense that when they die, they often undo their life’s work, leaving their families a legacy of loss, debt and stress.
Life insurance is a contractual agreement between an individual and an insurance provider, where the individual pays a regular premium in exchange for a payout to their beneficiaries upon their demise.
In a country with limited social security, this payout, known as death benefit, can act as a safety net for families, ensuring loved ones have the means or avoid debt and continue living decent lives despite the loss of a breadwinner.
Despite most people hoping for the best, we never know when we are going to die. Dying unexpectedly shortly after taking out a large loan, buying a car, a business or house can leave dependents not only without an income, but also in significant debt.
If surviving loved ones don’t have the skills, savings or means to manage this debt, your death could condemn them to a life of poverty despite having worked all your life to ensure their security and happiness.
More generally, in Nigeria, a country without government-provided welfare, millions of people dying each year without life insurance is placing a huge burden of care on extended families and communities.
If more people took up life insurance, resources currently consumed by caring for the indigent could be used for education, health, investment and business development.
Limited take-up of life insurance
Most Nigerians work so hard in the present to make ends meet that few have time or energy to think of the future. That said, part of being a responsible person and breadwinner demands that we consider the well-being of our loved ones after we have gone.
Despite the advantages of embracing life insurance in Nigeria, cultural taboos around discussing or planning for death is preventing many more Nigerians from taking the simple and relatively inexpensive step that can, nonetheless, make a very big difference to the future of their loved ones.
Huge benefit of Life Insurance
Depending on the detail of life covers purchased, in addition to providing your loved ones an income after demise.
- Life insurance can also protect them from falling into debt. A life cover can, for example, settle outstanding debts, such as mortgages, personal loans or credit card bills. As such, life insurance can prevent your family from being burdened with any financial obligations that you might leave behind, especially should you die unexpectedly before all your affairs are settled.
- One of the primary benefits of life insurance is that it provides a financial safety net for your loved ones in the event of your death. The death benefit paid out by the policy can help replace your income and cover living expenses for your family.
- Life Insurance can be earmarked for funding your children’s education. This ensures that your kids have the financial resources to pursue their academic goals even if you are no longer there to provide for them.
- Life insurance can be a valuable tool for estate planning. It can help heirs pay estate taxes or cover other expenses associated with settling an estate. It can also be used to leave an inheritance to beneficiaries.
- For business owners, life insurance can play a crucial role in business succession planning. It can provide funds to buy out a deceased partner’s share of the business or help the company continue operations during a transition period.
- More broadly, covers like whole life insurance are insurance solutions that provides you the opportunity of investment with embedded insurance protection against the risks of demise. The insurance premium is deducted within the period of investment but the insurance cover is for life, even when you have taken the maturity proceed. The return on investment on this type of plan is flexible but high (Linked to Federal Government of Nigeria Bonds).
- In Nigeria, life insurance premiums paid up to a certain limit are also eligible for tax deductions. As such, in addition to being the responsible thing to do, purchasing life cover can assist with financial planning while you are still alive.
One of the most intangible yet valuable benefits of life insurance, however, is the peace of mind it brings. Knowing that your loved ones will be protected financially after your demise can offer a sense of security and relief during uncertain times. By providing the comfort that your family will not be left destitute when you die, life insurance also brings calm and focus. Buying the calmness to grow their wealth in the security that this will not vanish or be lost at death, provides the focus in the here and now to invest, build wealth and confidently plan for the future even if this might not include you.
Generosity born of love
Life insurance is a simple tool for ordinary Nigerians to ensure their legacy by making sure their loved ones manage and thrive after they have gone.
Since most people love their families and devote their entire lives to ensuring their safety and comfort, the best and most generous thing to do is to take out life cover.
Life insurance is not, after all, for oneself. It is also much more than a financial instrument. Instead, life insurance is a gesture of love and responsibility, ensuring the future of loved ones.
