Andrew is a busy 44-year old professional in the finance sector. His wife, a freelance make-up artist insists on a weekend get-away at a resort somewhere along Lagos-Epe Expressway. On their way to the resort, the unexpected happens: a near-fatal accident almost claimed the life of Andrew. Though calamity is averted, he is confined to a wheelchair and voluntarily resigns at work on health grounds.
This scenario painted here is a fictional narrative that is based on real-life situations. Our world is full of uncertainties, and it takes less than a minute for our fortune in life to take a downward spiral. This is one of the considerations for making an informed decision about insurance. With a family plan, the insured secure their family’s financial security against the storms of life.
In less morbid situations like retirement, insurance is very much desirable in protecting your finances for the future. In the past, many conceived retirements as an armchair, tea-sipping, rocking chair moment in one’s life. But retirees have goals. Some may want to spend retirement years travelling the world or pursuing new hobbies without placing the burden of such expenses on children who may have their own family to cater for.
But there is still an inevitable twist to these years- a declining health. As one advances in age, nothing quite prepares anyone better for these difficult years than an insurance plan. Putting money in an annuity is like a pension plan. Many do not think that they need an insurance plan since they have grown-up children. It has been an age-long African mentality to use children as insurance. But life, sometimes, teaches very hard lessons about such expectations.
Investing wisely also involves setting the right priorities when one is still very young. For many young unmarried adults, it is easier to get them to buy expensive phones or garbs and other elements of glamorous lifestyle than to convince them to own an insurance plan that works for them. Meanwhile, they are likely to be less financially strained while single than when married with children on the same income.
At its best, a family insurance can serve as a safety net when circumstances change. A once-lucrative career may be lost. The organisation may divest and decide to reduce its staff strengths. Whatever the case may be, seeking insurance products in one’s younger years is one great goal to have.
Without insurance, businesses can easily wind up. And as seen in the aforementioned case of the fictitious character of Andrew, sometimes it just takes one accident to jolt us back to reality that life is completely uncertain.
Consider the devastating impact of the COVID-19 pandemic on businesses. In fact, 94 percent of the Fortune 1000 across the globe, and businesses in Nigeria have been impacted and are already seeing COVID-19 disruptions. After its first confirmed case, Nigeria’s federal and state governments implemented lockdowns across most cities and states. Borders were closed as well as non-essential businesses. Nigeria also faced declining remittances and export demand caused by the global recession. In a survey report titled, “Impacts of COVID-19 on food systems and poverty in Nigeria” by Kwaw Andam, Hyacinth Edeh, and James Thurlow, it was reported that Nigeria’s GDP fell by 23% during the lockdown.
Although the Agri-food system was functional during the lockdown having been classified as essential service, GDP fell by 11%, primarily due to restrictions on food services. Many traders found the transportation of food items as a big challenge at that period. Household incomes also fell by a quarter, leading to 9% points increase in the national poverty rate. More specifically, the lockdown policies reduced Nigeria’s GDP by US$11 billion or 23% during the 8-week period. Instead of worrying about what could happen, liability insurance can give you peace of mind, enabling you to concentrate on what truly matters — running a successful business.
Even when one is employed, investing in insurance products can be a saviour on a rainy day. According to United Nations’ data, 14 million young people are out of work in Nigeria, which has one of the world’s largest youth populations, with more than a third of its 200 million people aged 24 or under. After the lockdown, the unemployment rate spiked by 6.2% to 33.3% from 27.1% in the second quarter of 2020.
The figure now makes Nigeria move from 5th to the 3rd highest rate of unemployment in the world. Many companies made very tough decisions to reduce their staff strengths. Flexible and multi-skilled workers were retained while others were sacked. Some who are still employed had to accept a pay-cut or delayed salaries. In situations like these, having family insurance can protect the household from the grave consequences of unemployment and an unhappy life that can lead to depression.
* Olusegun Omosehin is the Managing Director, Old Mutual Nigeria Life Assurance Company.