Q. (1)
what is Insurance?
Insurance is a contract made by a company, society or by the state to provide a guarantee of compensation for loss,
damage, illness, injury, death, accident or disability in exchange for a sum of money called premium. In other words, insurance is a type of financial security that individuals can seek from improbable occurrences
that can impair him or her from carrying out normal social functions. A premium
or monthly payment is what insurance cost to an individual.
Q. (2)
what are the benefits of insurance?
Some benefits of insurance are as follows:
(a) Policyholders
benefit from (often free) professional advice on risk management, minimization and avoidance of loss.
(b) Policyholders
are usually bold and courageous when venturing into business activities because of the peace of mind and financial protection
guaranteed by their insurance coverage.
(c) Insurance
provides a bulwark against losses, which could have crippled businesses, truncate social lives and result in general financial
embarrassment.
(d) It
provides an avenue for displaying love and care by the insured to his beneficiaries.
Q. (3)
Why is insurance that important? Does everybody really need insurance?
Everybody within the insurable age really needs an insurance policy. Insurance
is based on the concept of risk. Without risk, there would be no need for insurance. Risk abounds everywhere and is futuristic in nature.
Insurance came into being to address risk and the associated fears of the unknown future. Till date, insurance remains the best human solution for fighting risk.
Risk is defined as either an uncertainty of an outcome of an event or the interest being insured.
Q. (4)
Can I have more than one financial security insurance with life cover?
Yes. You could hold more than one policy. However, if you request more
insurance coverage than your expenses indicate you need, the insurance company (AIICO) will want proof that a medical condition
is not motivating your request!
Q (5)
what happens if I cant make the required premiums?
Typically with other insurance products, you will have a grace period and if you pay within this time frame, you wont
be charged additional interest. But if you dont pay within the grace period,
your policy will lapse. However, with CAP or CEP, AIICO will usually draw from
the cash values you have accumulated to continue your premium payments. This
may lower the cash value of the policy, though. However, if you are unable to
pay because of permanent disability, having elected waiver of premium provision or rider on your policy - you do not have
to pay premium for the duration of your disability.
Q. (6)
What if my policy lapses?
Your policy may never lapse because if you have enough cash values built up in your policy, AIICO will use part of
the cash values to pay the premiums due. On the other hand, you not need to pay
further premiums if you become permanently disabled.
Q. (7)
I am young and single; do I need financial security insurance with life cover?
Yes, you need it. An advantage to buying insurance of this nature now
is that your premiums will be low. Insurance company (AIICOs) criteria for calculating premiums are based on how old you are
and how much insurance you are applying for. The older you are, the more you
pay. The longer the duration of the plan, the less you pay. If you have dependents in the future, you would have locked in the lower rates and you will have guaranteed
your insurability, because you wont have to take a medical test for life insurance in the future.
Q.
(8) Do I have to take medical exams to take these policies?
Yes, you have to because you will be classified based on height, weight, nicotine use and other health factors. The
insurance company will like to know the scope of the risks they are carrying. Your health status also determines to a limited
extent, the rate class category you fit in. So even if you have some health problems, you could be covered. The companys doctors,
at no expenses to you, conduct the examinations. A lot of clients are ever glad
for this examination because they have been too busy to take one in a long time!
Q. (9) what
do you look for in medical exams?
Usually urine and blood samples would be taken for analysis to enable the insurance company know that you are not harboring
a terminal illness.
Q. (10) what
in insurability?
How
acceptable, after risks assessment, an applicant is to AIICO.
Q. (11) I have been privy to tales of insurance companies
not paying claims?
AIICO is a reputable insurance company, which does not shy away from paying
claims. This is a challenge - if you know anyone AIICO owes in terms of legitimate claims, call or mail my agency manager
or me. The fact that some companies are not honouring claims should not make insurance less attractive. Each company should be evaluated on her antecedents, current and projected financial strengths. The fact that some banks become insolvent has not made all banks bad, anyway. Aiico not only settles claim
but periodically publishes the particulars of matured policies in the newspapers as a reminder to pertinent policy-holders
(see The Guardian [Nigeria] Monday, June 25,2001-pages28-29 and Monday, September27, 1999-pages66-67)
Q. (12) How financially strong
is AIICO
AIICO is the leading insurance company in Nigeria (discounting
NICON - which is largely backed by the federal government). It is unarguably
the leading life insurer in Nigeria, and it has a formidable presence in all arms of the insurance business. You may visit the companys website (www.aiicoplc.com) for greater details. The company has been in existence for almost forty years.
Q. (13) I
have a policy with AIICO but have stopped paying premiums long ago. Is there
any way I can continue with the policy or get back my contributions?
Sure! There are so many ways we can help you. Give us a call; your
money is not gone.
Q. (14) Can I buy a policy on someone
else?
Yes, but only if you have an insurable interest in that person. This usually means a relative, a domestic servant,
a girlfriend, a spouse, your children, or a business partner.
Q. (15) Can I buy a policy on someone
else without his/her knowing about it?
No, you cannot take out an insurance policy on someone without his or her knowledge.
Q. (16) Can I name anyone I want
as my beneficiary?
Well most people choose only their spouse, it is possible to name more than one person as a beneficiary - but only
if those person have an insurable interest in your policy. For example, if you have an N1million
CAP policy on your life, you could name your wife and four children to
share in the policy at N 200,000 each.
Q. (17) Can I borrow money against my life insurance
policy?
Yes. With CAP and CEP, you can take out a loan against the cash
values you have built up in the policy. Of course, you will have to pay back the loan with interest. At the moment, AIICO charges 6% annual interest on the loan. It credits you back with 4% when the loan
is fully paid back. The company only retains 2% to service the loan!
Is that not incredible? Yet it is true! However, if you die before
you pay back the loan, the balance that you owe will be deducted from the death benefit payable to your beneficiaries. Remember,
it is a loan.
Q. (18) Are CAP and CEP whole life or ordinary life insurance?
No, they are not. Whole life policies stretch the cost of insurance out over a longer
period of time in order to level out the otherwise increasing cost
of insurance. In this case, it is spread not over a few years but over an entire life. This is not the case with CAP and CEP,
whose span is not only determined by you but you get returns in your lifetime. In case of death before policy maturity, your
beneficiaries get the amount assured.
Q. (19) Why are you so particular about CAP and CEP?
Insurance products are not bought simply because of the monetary
gains, but for the peace of mind and financial security they guarantee. However, if there is any product that effectively
guarantees maximal gains and peace of mind, it is CAP or CEP.
Insurance contracts are aleatory, which are contracts where the
money relinquished by each party is not equal. For instance, one may pay lots in premium on motor vehicle insurance, but never
claim the money because ones car was never involved in an accident. On the other hand, you may claim for more than you have
paid in premiums- for instance, when death occurs before the maturity of your policy. With CAP or to a limited extent, CEP,
you usually claim more than your contributions. Head or tail, you win! - If you
are alive at maturity, you claim your money, if you die before maturity, your beneficiarys benefit.
Q. (20) what is the process that insurance company
follows when I file a claim?
Listed below is a general idea of the claim process.
(a)
The insured (or beneficiary) calls agent or the insurance company to report initial Claim.
(b) Claim received at the local claims department.
(c) The insured (or beneficiary) receives a response from the claims
department to
review loss facts and claim handling procedure.
(d) If an inspection is needed, the claim is assigned to a field
adjuster who contacts the insured (or beneficiaries) and sets an appointment.
(e) If an inspection is not needed, the adjuster request information
needed to
process
the claim and issue a settlement cheque.
Q. (21) How long does it
take an insurance company to settle claims?
Averagely, it is a matter of few weeks.
Q. (22) what is disability?
A condition that hampers an
individuals ability to carry on his or her normal, daily activities.
Q. (23) what is inspection?
The process of investigating facts about people or property involved
in a claim or application.
Q. (24) Some of these offer are tempting? Can they be true? How does insurance Company make their money?
CAP and CEP are very true. Nigerian insurance companies make their
money in the following ways:
(a)
Cash deposit in or bills of exchange accepted by licensed banks.
(b)
Loans on life policies within their surrendered value.
(c)
Loans on real property, machinery and plants.
(d)
Loans to building societies and banks.
(e)
Shares in securities of co-operative societies and securities of limited
liability companies.
(f) Other investments
as may be prescribed by the National Insurance Commission.
Q. (25) Where can I seek redress if my claims are not
honoured, after all.
Provided they are legitimate, AIICO will honour all claims. However,
the Insured can seek redress through the law courts, the Nigerian Insurers Association (NIA) and the National Insurance Commission
(NAICOM). Another avenue to enforce performance is the Public Complaint
Bureaux.
Q. (26) How periodic are
the premium payments?
The insured can opt to pay monthly, quarterly, bi-annually or annually.
However, paying premiums annually enjoys the greatest discounts because,
it affords the insurance company the opportunity to invest your money in one lump sum annually. The least discount is given
to the monthly premium payments. AIICO only encourages the monthly payment via a banks standing order. Otherwise, monthly
payment makes the process of premium payment cumbersome to the insured as well as the company. The probability of defaulting
on premium payments is also higher than other payment modes.
Q. (27) Apart form CAP and CEP, what other products has
AIICO?
AIICO has other products in the life and financial security category.
Apart from this, it is well represented in all other arms of the insurance business-fire; theft; motor-insurance; fidelity
guarantee insurance; bonds; shipping; machinery; housing/home; annuities and so on. Therefore, if you have other types of
risk to which you or your company may be exposed, you can call me for identification and evaluation of such risk and find
out if it is insurable.
Q. (28) What are insurable risk and non- insurable risk?
Non-insurable risk cannot be measured or is too frequently
occurring to be considered insurable. An insurable risk must meet these qualifications:
(a)
The loss insured must be able to be defined.
(b)
The loss must have occurred out of accidental or act of God circumstance.
(c) To be insured, the loss, if it transpires, must cause a hardship.
(d) The risk
involved must not be a highly unlikely occurrence.
(d) The risk must not be subject to the same loss at the same time as
a large number of other risks.
(e)
The loss must be financially calculable by a company.
(f)
The probability of loss must be calculable.
Q. (29)
What is an accident and an Act-of God
An accident is an unexpected event that is beyond the control of
any person, while act-of-God is a term used to describe an event that occurred from natural, unpreventable events.
Q. (30) I have shares and huge investments in banks,
do I need to take an insurance policy?
Buying securities of companies and having bank accounts are nice investments. However, none of them can be substituted
for insurance. This is the reason most banks in North America and Europe sell insurance products. In the same vein, some commercial
and mortgage banks in Nigeria have developed banking/insurance products jointly with leading insurance companies.
Q. (31) If I invest an amount of
money, say one million naira, in a fixed deposit account at a bank and the an equivalent amount in insurance, the banks investment
yields better than the latter. Is there any need for insurance policy?
There is no basis for comparison. The bank takes your one million naira in bulk and she is in
a position to reinvest it to make huge profits. However, you only pay the same, one million naira to the insurance company
in bits (called premium), spread over the duration of the policy.
Q (32) My religion forbids
insurance.
Pure lies. Nothing can be further from the truth. There is no religion
that is against insurance. According to the biblical records, the first underwriter is God. Islam fully backs insurance as
exemplified by Takaful-the Islamic
insurance. These are enough examples for an average Nigerian who follows either of these religions. What most religions are
against are exploitative interests on borrowings, banking, insurance and other general transactions.
Q (33) I have some insurance policies. Do I need to acquire more insurance?
The question of buying more insurance or not can only be answered
after considering some pertinent factors, of which the following are not exclusive:
(a) You have to consider your current financial
position vis-à-vis your initial status when the policies were taken. If you are more buoyant than hitherto, that is an indication
that you need more insurance.
(b) A thorough evaluation of the risk you are currently
exposed to may indicate the need to buy more insurance.
(c) When you consider the maturity dates of the
policies you are holding, you might want to take new policies to outlive the current acquisitions.
(d) The attractive features of new insurance products
may spur the need for more insurance
(e) Various sentimental reasons-one of which might
be to belong to Aiico family of policyholders. You may want to associate with a company with strong financial base that does
not shy away from paying claims.
Q.
(34) I have other question to ask than the ones featured here.
Call me on +234-8023894247
or send e-mail to mailto:woledapo@yahoo.com .To every insurance problem, there is always a solution.
