Much Ado About Insurance In Nigeria: To Get or Not Get?

Insurance may not be the most exciting topic for young people in Nigeria, but it is without doubt one of the most important aspects of financial planning and risk management. As a young person, you might be more focused on building your career, starting a family, or pursuing your passions, but understanding how significant insurance is in your life cannot be overemphasized.

In this article, we’ll explore why insurance is important for you and how it can help safeguard your future and provide you with peace of mind.

Table of Contents

What Is Insurance?

Before we start talking about the importance of insurance for you, let’s first establish what insurance is. Insurance is designed to protect individuals, families, and businesses from unexpected financial losses. It works by gathering the potential risks faced by a lot of people and dividing the expenses among a large group. So you pay a regular fee to get protection for things like accidents, sickness, theft, or natural disasters if they occur.

Why Insurance Is Important For You As A Young Person

Financial protection: Life is unpredictable, and as a young person, you are not exempted from facing unexpected challenges. Accidents, illnesses, and natural disasters can strike at any age. Insurance provides a safety net that helps to reduce the financial burden of such events. For example, health insurance covers medical expenses, and car insurance helps with repair costs after an accident. Although we don’t pray for bad things to happen, you know you are not starting from scratch if you face any.
Asset protection: As you begin to accumulate assets like a car or a house, insurance becomes even more important. Auto insurance, for instance, protects your vehicle from theft or damage, while homeowner’s insurance safeguards your house and belongings from various perils like fire, burglary, and natural disasters.
Income protection: The ability to earn an income is one of your most valuable assets as a young person. But what happens if that is no longer the case? Disability insurance ensures that if you are unable to work due to injury or illness, you still receive a portion of your income. This coverage can be a financial lifeline during challenging times.
Healthcare costs: The cost of healthcare in Nigeria is rising, and one medical emergency can deplete your savings. Health insurance is vital for accessing quality medical care without worrying about high medical bills. It provides coverage for hospitalization, surgeries, medications, preventive care, etc.
Investment in the future: Insurance can also serve as an investment tool. Some insurance products, like life insurance and retirement annuities, can help you save and grow your money over time. These policies provide both protection and a means to build wealth for your long-term financial goals. Ultimately, you are killing two birds with one stone.
Peace of mind: Knowing that you have insurance coverage can offer peace of mind. You won’t have to constantly worry about what might happen in the event of an unforeseen crisis. This mental relief can positively impact your overall well-being and allow you to focus on your personal and professional growth.

Types of Insurance You Should Consider

Health Insurance: Nigeria’s healthcare system can be unpredictable, and medical expenses can be exorbitant. Health insurance ensures you can access quality healthcare without draining your finances.
Auto Insurance: If you own a car, auto insurance is not just a legal requirement but also a crucial protection against accidents, theft, and damage to your vehicle.
Life Insurance: While it may seem premature for young people to think about life insurance, it can be a smart financial move. It provides financial security for your loved ones in the event of your untimely demise.
Property Insurance: If you rent a house or own valuable possessions, property insurance can protect you against losses due to theft, fire, or natural disasters.
Disability Insurance: Your income is a significant asset, and disability insurance ensures you have a source of income if you become unable to work due to disability.
Savings and Investment Products: Consider long-term savings and investment products offered by insurance companies, such as retirement annuities or education savings plans, to secure your financial future.

How Insurance Helps Your Financial Journey

Early career: As a young professional, you may not have substantial savings yet. Insurance helps you manage unexpected financial risks. For example, health insurance covers medical expenses, and auto insurance protects your car, reducing the impact of unexpected costs on your budget. That way, you can manage your income without worrying about unplanned bills.
Family formation: When you start a family, life insurance becomes vital. It ensures that your loved ones will be financially secure if you were to pass away unexpectedly. This protection can cover immediate expenses and provide for long-term needs, such as education. We don’t pray for it to happen but if it does, your family has something to fall back to.
Homeownership: When you buy a home, homeowner’s insurance safeguards your property and possessions against risks like fire, theft, or natural disasters. This protection is essential to preserve your investment.
Car ownership: Auto insurance covers damage to your vehicle and liability for accidents, reducing the financial strain of accidents and repairs. Vehicle maintenance can be very expensive especially when they are used on Nigerian roads, auto insurance helps you reduce the cost of these damages on your budget.
Career advancement: As you progress in your career and your income increases, disability insurance ensures you have something to fall back on if you can’t work due to illness or injury. It provides a portion of your income, allowing you to maintain your lifestyle.
Retirement planning: Annuities and long-term disability insurance can provide a source of income during retirement or in case you are unable to work due to disability. Having this will supplement your retirement savings.
Investment opportunities: Some insurance products, like whole life insurance, allow you to build cash value over time. This can serve as a financial asset that you can borrow against or use to fund future financial goals.
Estate planning: Life insurance can play a role in estate planning, ensuring your assets are distributed as you wish and minimizing estate taxes for your heirs.
Reduced stress: Insurance provides a safety net that reduces financial stress. Knowing that you have coverage for various risks allows you to focus on your goals and aspirations without constant worry about the unexpected.
Financial confidence: Insurance gives you confidence that you can navigate unexpected challenges without derailing your financial progress. This confidence can lead to better financial decision-making and long-term planning. So you don’t have to panic buy or borrow money needlessly.

Conclusion

Before now, Insurance might not have been a top priority for you, but it should be an integral part of your financial plan henceforth. It’s not just about safeguarding you against unexpected events, it’s about securing your future and achieving your financial goals because there are significantly reduced loopholes to drain your finances and derail your long-term financial goal. By investing in the right insurance policies, you not only protect yourself and your loved ones but also gain peace of mind and the confidence to pursue your dreams without the constant fear of financial setbacks. So, don’t underestimate the importance of insurance because you are young, it’s a vital tool for building a secure and prosperous future. Research a plan that works for you and start now.