It has often been said that insurance is a product you can buy when you do not need it, but cannot buy when you do. This means that you must get the necessary insurance protection before the risk exposure crystallizes.
Prudent investors, family breadwinners, and a lot more individuals seek to obtain their insurance coverage before the rainy day. This short article explores the nature and utility of a life insurance policy. It also provides useful guidance on how to realize your investments in life insurance-related contracts.
Why Life Assurance?
Life is a risky venture. A risk is said to exist where there is a high probability of occurrence of an undesirable event. As undesirable as death may be, one thing is certain, namely that death will come someday. While death is certain, what is uncertain is the time and circumstances of death.
This uncertainty as to the time and circumstances of death is the reason people are encouraged to obtain life assurance. A man who died before retirement while his children were still in school is taken to have died an unexpected death. In such circumstances, the family will be exposed to financial hardship, unless he already has some form of financial security.
Therefore, managing the risk of unexpected death is important. Among other benefits, life insurance attempts to cushion the financial impact on the family, of the unexpected death of a breadwinner.
The Typical Life Assurance Policy
A life assurance policy is a contract of insurance (also known as life assurance) between the insurer and the insured (the assured), whereby, in consideration of the payment of some agreed premium, whether upon installments or a lump sum, the insurer agrees to pay the insured’s next of kin an agreed amount called the policy or sum assured upon death or as may be agreed.
For the most part, there are two types of life assurance plans: either term or permanent plans, or some combination of the two. Life insurers offer various forms of term plans and traditional life policies, as well as “interest-sensitive” products, which have become more prevalent since the 1980s.
Term Life Assurance
The oldest and perhaps the most common type of life assurance is term assurance. The insurer pays the full death benefits to the next of kin if the assured dies within the policy term. However, the assured gets nothing if he survives the policy term.
A term assurance policy is highly recommended for soldiers and people working out of jurisdiction, on foreign service. A term life assurance policy often comes with extensions, including critical illness insurance and personal accident insurance. Term assurance covers death from any cause, but excludes suicide.
Whole Life Assurance
Whole life is a type of permanent life insurance that lasts for the entire life and usually comes with an investment-like feature that the insured can use while still living, called the cash value.
The cash value account provides advantages like allowing the assured to borrow against it or using the growth to pay his policy’s premiums. Although whole life insurance policies cost significantly more than term life insurance, they are worth considering for those with complex financial needs.
Traditional whole life insurance has a cash value amount that grows at a fixed rate. Other types of whole life grow the cash value differently or have flexibility in payment schedules. Knowing what your financial needs are and how you could benefit from your policy’s cash value can help you determine which type of whole-life assurance you need.
Statutory Protection During Contract
Part of the protection offered to the insured by regulation is what is termed the freelook period. The insurer is under obligation to observe a free-look period during which the insured is expected to make up his mind whether or not he wants to obtain the policy.
He pays the premium and a policy is issued but does not take effect until the end of the freelook period, which ranges between two weeks and one month, depending on the jurisdiction. For Nigeria, however, it lasts for two weeks.
Maturity
Maturity means the date at which a life insurance policy matures, that is, comes to an end. It is also known as the maturity date of the policy. On this date, the insured is entitled to receive all the maturity benefits.
Surrender and Surrender Value
The insured has the option to surrender the value of his life assurance contributions if anything happens during the term of the contract for which he cannot continue paying premiums until maturity.
The surrender value is the amount a policyholder can withdraw from their life insurance policy at any time. surrender value is not to be confused with the cash value. The cash value is the amount the policy is worth as it builds over time.
Policy Lapse
A policy lapse is a term by which all benefits to the policyholder cease and the policy is terminated due to non-payment of the premium amount on the due date or even after the grace period.
Realization of Life Assurance Benefits
When a person with a life insurance policy – called a life assured – dies, a claim intimation is sent to the insurance company. The assignee or nominee under the policy can do this.
So can any close relative or the agent who handles the policy. When the policy involves a permanent plan, the insurer usually indicates maturity and invites the assured to make claims.
Pre-Contract /Claims Management Support Services
TPL gladly offers its registered members and other members of the public in need, some precontract and claims recovery advisory support in respect of all kinds of insurance policies.
Our pre-contract support services ensure that you can obtain the best contract terms in your insurance policies and enable you to be acquainted with the general terms and conditions of the contract for total compliance.
Our claims recovery support services ensure that you can make successful claims at the relevant time. Contact us today and enjoy peace of mind on all your insurance policies.
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Have questions about claim settlements or need assistance with your insurance policy? Our team is here to help! Reach out to us via email at info@tplng.com or give us a call at 0905-776-6182. We’re committed to ensuring genuine claim settlements and supporting our valued members.
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