Insurance policies are necessary. Have you ever heard the phrase, “Some families are just one illness away from poverty”? Well, it’s true. As much as we try not to have negative thoughts regarding our lives and family, the reality is that if you don’t save or have a way to cover emergency expenses when they happen, you will have to borrow money, sell your belongings or find some other way to pay. Depending on the severity or longevity of the situation, even savings might not be enough.
That is where insurance comes in. It is a safety net that ensures that no matter how bad things get, there is a level you will not fall below. To ensure that you and your family are shielded from what life may throw your way, here are 5 insurance policies you should buy as part of your overall financial plan.
1. Health Insurance
This takes care of your bills when you incur medical expenses. Depending on the level of cover you choose, your provider will pay for accident/emergency treatment, outpatient care, medical procedures, dental care, prescribed medication and much more.
It is particularly useful when you have young children or elderly parents who need regular attention. Without health insurance, a small fever or a simple gastrointestinal disorder can set you back N20,000 per visit per child and kids will typically have at least one of such events a quarter.
Said simply, this policy makes hospital bills a fixed cost for the year and gives you peace of mind that if or when you need treatment, the bills will be sorted.
2. Life Insurance
The second must-have insurance policy is life insurance. Author Farshad Asl was quoted saying, “I don’t call it life insurance, I call it love insurance”.
If you could pay a price today to make sure that no matter what happens to you, your child would complete his/her education to the standard you wish for them, how much would you pay? Because you love them, no price would be too much; you would do anything for your child. That’s how to think about this policy
We happily buy toys and clothes for our children but we neglect to buy them the most important thing, their future.
3. Home Insurance
After you have secured your most important assets, you can then consider your material possessions. If you own your own home, it’s probably your most expensive material possession. It would be prudent to ensure that you don’t lose your investment in case it gets damaged. Home insurance indemnifies you from financial losses as a result of fire, flood, burglary and other specific perils that may occur to your house or property.
If you are a renter, you can buy home insurance for your household contents and let the landlord worry about the building. Nowadays, home insurance can cover things such as the cost of alternative accommodation if your house is an inhabitable and legal liability to your guests who may suffer an accidental injury.
4. Car Insurance
First of all, it is illegal to drive a car on the streets of Nigeria if your vehicle is not insured. Car insurance comes in two main categories: your liability to 3rd parties and your own damage/loss.
If you or a designated driver is responsible for property damage, bodily injury or death of a 3rd party while operating your vehicle, car insurance can help you cover the costs that you would be liable to pay. This type of insurance starts from as low as N5,000 a year.
You may also suffer own damage or loss while operating your car as a result of an accident, fire or theft. It would be prudent to buy an insurance policy that pays for out of pocket expenses that arise from such occurrences.
5. Retirement Annuity
While you can save for retirement without buying an insurance product, insurance offers a useful product called an Annuity. This policy is useful in case you outlive your retirement savings.
Many people would not save for their retirement unless required to do so by law. Even then, the effects of high inflation would erode any significant capital gains. An annuity is a product you can buy that pays out a fixed amount to you for the rest of your life even if your retirement savings have run out. It has the added benefit of paying out the balance of your savings to your spouse or other beneficiaries if you do die within a certain period.
In summary, insurance can eat into the money you earn today and for that reason, many people opt not to buy it. It is, however, a small price to pay now so that you don’t shell out more than you can afford later. Contact an insurance agent HERE to ask questions you may have and to buy a policy.