What is Life Insurance? Types and Benefits of Life Insurance

Insurance on a broader scale, serves the purpose of protecting an individual, a family, or a company from financial loss which may result from perils or unexpected damages. Such damages which may result from natural disasters like fire, flood, electrocution, disease, drought, etc causes harm to our properties and are in some cases, life threatening.

Insurance is created to guarantee you of any loss you may encounter within you, your place of work, or elsewhere. Among the several types of insurance available, life insurance is one of the most important though not quit common in most underdeveloped countries and developing countries like Nigeria for instance. It is very essential for each individual (irrespective of gender) especially older adults.

How Does Life Insurance Work?

In life insurance, an agreement is reached between you and your insurance company by paying a fixed among of money to that company to financially compensate your family or any chosen beneficiary when you eventually become deceased. The premium or money paid by you the insured is given periodically or is paid at once under an insurance policy to the company (the insurer) please note that the insurer must carry out certain examination before offering you a life insurance policy. For example, considering your health status at that particular moment before offering you a premium. These criteria along with others like suicide or war may help the insurer to escape liabilities.

Acquiring a life insurance plan is best offered at youthful ages, because the insurer understands that you are young and less vulnerable to disease than older people and hence have a longer life expectancy, hence the insurance policy will offer you a cheaper life insurance plan.

Although this does not mean you don’t deserve a life insurance plan at older ages, there are special added coverages designed for you e.g., you can acquire a premium that covers disease or disabilities which may result to your death. One’s gender also affect costs of premiums, for e.g. women have a longer life span than men, hence men are issued higher premium costs because of their tendency to dying earlier than women. 

You can also reduce the cost of your premiums by acquiring a joint premium for you and your spouse or colleagues at work; or by acquiring a permanent life insurance plan which is explained further in this article.

Benefits of Life Insurance

Life insurance was first practiced by the ancient Rome burial clubs; their aim was to guarantee the members of the organization of the expenses that will be made at their funerals when such members unfortunately become deceased. This started as early as 1583 by a man called Richard. Since then, life insurance benefits are mainly to provide financial support to your family or relatives after your departure. But there are other numerous benefits of life insurance; There are also other bonuses offered by the Insurance policy.

The insured may purchase coverages that serve as inheritance to the family of the deceased, the insured pays a premium which is given to his/her family as mortgage.

Also, taxes can be paid by the insurer instead of the deceased family members. Other financial benefits are manifested via home maintenance of the deceased family, funeral expenses, as well as capital for business or education. Each benefit depends on the type of policy the insured acquired.

Types of Life Insurance Policy

There are a wide varieties of benefits derived from life insurance, which is what makes it one of the best type of insurance you can ever acquire. Although not commonly known by some selected few; life insurance is important for everyone though not compulsory. The benefits however depend on the amount of money you pay to the insurer or the company. This makes life insurance plans quite expensive to those who are financially struggling for survival. Now, the benefits of life insurance are numerous but can be grouped into two basically:

  • The Term Life Insurance Policy and 
  • Permanent Life Insurance Policy

The term life insurance policy is an agreement that your family or chosen beneficiary will receive financial support from you when you die; so you a certain amount of money for a particular duration like 20 years or less, but if nothing happens to you during this period of time till the premium expires, there guarantee is lost and no financial support will be issued to the beneficiary when you die; except you continually renew your term premiums. 

Term life insurance policies are designed with reduced benefits and cheaper premiums as compared to permanent life insurance policies.

If you are acquiring a life insurance plan for the first time and you are not sure of your decision, you can first choose a life insurance plan and later switch to a permanent or whole life insurance plan; or just walk away if you are having any difficulties or change of mind.

On the other hand, permanent life insurance policies as the name implies are permanent, they last for a life time and have wider benefits and cost of premiums than term insurance plans.

Top 10 Companies Offering Life Insurance in Nigeria

To enjoy the above listed benefits of life insurance, we have compiled a list of the best companies within Nigeria whose major desire in business is to satisfy the needs of the insured.

Without much hesitation, here is a decennary of insurers enlisted in the panegyric below

  • AXA Mansard life insurance
  • Saap Technology Nigeria Limited
  • Industrial and general life insurance
  • AIICO life insurance
  • Mutual Benefits Life Assurance Company Limited
  • Leadway life insurance
  • NEM Insurance Pls
  • GET Insurance
  • Custodian and Allied life insurance
  • Cornerstone Insurance Plc.

Be the first to comment

Leave a Reply

Your email address will not be published.