Life Insurance is all about protecting your future and that of your family/dependants. Life Insurance nowadays is more fashionable because there are many products that involve benefits being payable even before death. There are products for family, kid’s education, capital accumulation, thrift savings plan and so on.
No matter the type of cover you choose, factors ranging from your needs to your age and much more will determine your premium. This post is coming with a purpose of enlightening you on how to purchase a cover that will be of benefit to you.
How To Choose A Life Insurance Plan
1. DETERMINE YOUR NEED
Before you fill the proposal form or issue your cheque, the first thing to do it to determine exactly what your need is. How to do this is to look within. Answer basic questions like:
Are you single or married?
Do you have kids and how many?
What are your running expenses?
Can you afford to keep paying the premium?
It is essential to answer these questions because life insurance involves premium payment which is periodical. You are to estimate your living expenses and add the insurance premium and see how it goes. It is important because once you start should be able to sustain your payment without which you will not be able to reap your full benefit. Also answering these questions will go a long way to help in this next step below.
2. MAKE YOUR CHOICE
There are different life insurance covers available you can choose from. Here are the basic plans: Term assurance, whole life assurance and endowment plan.
- Term Assurance: provides cover for a specific period and will only pay out if the life assured dies during the period. It is the most basic of all life assurance policies. However, if the assured survives, no payment is made and the policy expires. There are different types of term assurance:
- Level Term Assurance
- Renewable Term Assurance
- Convertible Term Assurance
- Increasing Term Assurance
- Decreasing Term Assurance
- Family Income Policy
- Increasing Family Income Policy
- Unit-Linked Term Assurance
- Whole Life Assurance: is a very simple policy which pays out whenever the life assured dies. This is different from Term Assurance because it is a permanent policy, hence it does not expire. It is more expensive. Whole life is a substantive policy and can be used as security for loans. There are different types of Whole Life Cover:
- Non-profit Whole Life Policy
- With-profit Whole Life Policy
- Low-Cost Whole Life Policy
- Single Premium Unit-Linked Whole Life Policy
- Regular Premium Unit-Linked Whole Life Policy
- Endowment Plan: Allows the sum assured to be payable on a fixed date – the maturity date – or on the life of assured’s earlier death. What this mean is that if the assured did not die, the payout will go to him but if he does, it goes to his beneficiaries. Endowment policies are substantive policies because there will be payout at a point in the future and can be used as a security for loans. The following are the types of endowment policies:
- Non-profit endowments
- With-profit endowments
- Low-cost endowments
- Low-start endowments
- Unit-Linked Endowments
- Pure Endowments
- Guaranteed Bonds
Due to product innovation, most of the above covers have been combined by various insurance companies to arrive at attractive policies for individuals and families. For example Children Education Policies, Capital Builder policies, income protection policies etc. Some have a combination of features of whole life, endowment or even annuity.
3. CHOOSE AN INSURANCE COMPANY OR AGENT
Choose a company with good reputation for paying claims. There are more than 15 life offices in Nigeria at present offering divers life insurance products, approach them and request for a catalogue of their policies. Here is the list of approved insurers in the country on NAICOM site. You can also approach an agent of the company to assist you (but exercise caution because of bad agents), ensure you issue a cheque for the premium and in the name of the insurance company. Pay and collect your receipt and file it properly.
4. PAY THE PREMIUM AND SUBMIT THE FORMS
After selection, complete the proposal form, submit all required documents and most importantly pay your premium. Without the payment of premium insurance contract is void. Some policies require periodical payment others yearly, whichever one it is ensure you pay promptly. If the policy requires you taking a medical test, do it with dispatch.
Insurance comes with peace of mind, so after you have completed the documentation and paid your premium leave the rest. Keep all your documents in a safe place, in a file jacket labeled “Insurance documents.” In case a claim occur maybe your policy terminates and you need to collect your surrender value, go with your documents to the company to do so. If you have any issues call the numbers on your form or documents.
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