Most Nigerians shy away from insurance because they lack a basic understanding of the concepts of how things work in the terrain.
When you ask Nigerians to insure their property or some other things, they just look at you, smile or laugh and simply walk away.
This is because most people in Nigeria, have a faint understanding of how the insurance terrain works.
Some do not even know how to start the process or know what must be insured.
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Insurance is a vague concept among Nigerians because activities in that sector appear shrouded in mystery to most Nigerians.
According to Investopedia, insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company.
Though, there are a few discussions here and about insurance but those discussions are not in anyway illuminating to the illiterates who are in the teeming majority can understand it.
The situation of the economy is also a major reason why people refrain from insuring anything at the moment.
In this article, a few terms commonly used by insurance professionals shall be discussed.
Basic Insurance Terms You Need To Understand
This is a monthly fee you pay in order to be insured. Premium is the real cost that clients pay to be eligible to receive the policy’s benefits.
Normally, the higher the premium, the more generous the coverage.
In some cases, however, companies do charge higher premiums when they suspect there may be a higher risk
An insurance deductible is a specific amount you must spend before your insurance policy pays for some or all of your claims.
Insurance companies use deductibles to ensure policyholders have skin in the game and will share the cost of any claims.
Deductible talks about the portion paid by a policyholder when an incident occurs (accident, fire, etc.).
Suppose the deductible is 1,000 Naira and the damage caused was 60,000 Naira, the insurance company will pay 59,000 Naira.
A person who owns an insurance policy with an insurance company is referred to as a policy holder.
He could also go by other names such as insured, policy owner, plan member, beneficiary, client, policy subscriber and coverage holder.
These terms are often used interchangeably to describe the individual or entity that is covered by an insurance policy.
So, when a person buys a policy under his name, he becomes the policyholder, and he is protected by all of the details inside policy.
An insurance contract is a document representing the agreement between an insurance company and the insured.
This insurance contract is the insuring agreement, which specifies the risks covered, the limits of the policy, and the term of the policy.
Reimbursement is payment of the expenses incurred as a loss covered by an insurance policy.
There are so many types of insurance available to prospective insurance policy holders which includes, life insurance, health insurance, personal property liability among so many others.
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