Insurance in Ghana is one of the fierce enemies living with Ghanaian citizens. It is one of the most bitterly talked about topics aside other matters. Because clients of various insurance companies have profusely complained about how their deductions and claims are treated. I will not put a blame on any party involve; either the insurance company, the insured or the insurance sales agent. Every one of the above mentioned have a part to play in this agony that exist in the insurance industry. From my panorama, I believe the insured is put under pressure to buy and thus do not take the time to read the insurance policy(contract). It’s unfortunate the insurance company are not liable to pay claims on feelings or pressure. So try not to buy under pressure.
Insurance premiums are also on monthly basis. And insurance companies do not hesitate to deduct twice if a month’s premium(what you pay monthly for the insurance policy) is missed. Why is this the case? It is because the insurance policy says you should pay a certain amount(which is the premium) monthly. If you therefore happen to miss the payment for a month, it is deducted the following month. Again sales agent are pressured with targets and so they give the good side of the insurance policy without explaining the content of the policy contract. This content must be explain well and understood well enough before a sale is closed. However, I want to state emphatically that the one who buys the insurance policy(the insured) must make every effort to know what he is going into. A contract is a contract and it takes into consideration the content, and doesn’t take into account your emotions. Because either party defaults in the policy transactions, temper and emotions rise and that is what leads to many bitterness and agony. After such agony clients vow not to buy an insurance policy again. To help my cherished readers, i will like to say an insurance policy is not in itself bad. It is good. However you need to know that insurance has a basic underlying purpose. This will help you to approach insurance with a good motive and benefit greatly from it. Thus, in this article I will like to help readers know what an insurance is, why an insurance is important, the primary underlying basis of insurance and its benefits.
WHAT IS INSURANCE?
According to investopedia, “Insurance is a contract, represented by a policy(in the form of a document), in which an individual or entity receives financial protection or reimbursement against losses from an insurance company”. This is a type of risk management that primarily helps to hedge against uncertain risks. Uncertainty is something that is inevitable in life. An insurance provides cover for various perils. It may include floods, fire, burglary, death, auto accident and the like. These perils have given the business fraternity the quest to develop insurance to bring indemnity. Example is an owner(insured) of a burnt house who receives a claim for a new or renovated house. His house has been restored even though it was burnt. And that is the fundamental essence of insurance. Let me say this, investigations will be made before a claim is made. Every peril is different when it comes to insurance and this gives rise to varieties of insurance. They may include but not limited to auto(or general), life, marine, burglary, travel insurance etc.
THE PRIMARY UNDERLYING BASIS OF INSURANCE
The primary underlying basis of insurance is to restore financial loss or any related financial loss. It has not change and I don’t think it will change. Immediately it changes it ceases to be insurance. Many people especially Ghanaians are likely to ask an insurance company how much interest he will be paid after some years. And probably that is how come many insurance companies have created an investment component in a life insurance policy. This is good but we need to understand that the main purpose is to restore a loss due to an uncertain event. This will make clients know and understand what they are going in for. Also having an insurance company restoring your loss in some few weeks or months for the many years of struggle is far better than an interest payment made to you. A whole building restored after a fire outbreak cannot be compared to an interest payment made to you. The interest payment may not even be enough to build another house but the insurance company no matter your total amount of premium is obliged to rebuild for you. This leads us to a brief look at the benefits of insurance.
THE BENEFITS OF INSURANCE
Anything of great value is weighed by it relevance and profitability. Rationally people look at the myriad of benefits about a subject before a decision is made. Sometimes we fail to even look at the demerits of the subject in question. Insurance has numerous benefits to the insured, insurance company and even a country’s economy as a whole. Some of the benefits are:
- Insurance provides security and safety. Properties and lives are secured and safe because insurance can restore it in a jiffy in case of bad events.
- Insurance provides peace of mind. You have peace of mind because you know that you will be compensated accordingly when there is a need to. You will be in less stress in the event of financial loss.
- Insurance provides protection against future loss. Insurance is a type of risk management against any future loss depending on the type of insurance you sign on. You are definitely protected from future loss when you have one.
- Insurance helps in developing the habits of savings. Because the policy requires that one pays premiums every month, it encourages savings.
- It is a way of leaving a legacy. Most wealth legacies inherited by the whites are results of life insurance of the deceased. You can transfer a fortune to your children or grandchildren in the future in case of death. As king Solomon quipped, ‘a good man leaves an inheritance for his grandchildren’.
To draw the curtains, Insurance is good and beneficial and I encourage you to go for one. But before you sign up, please be sure to read and understand the contents of the contract. Take responsibility, part away few pennies and watch yourself live in safety and peace when in crisis. To this end I will say make hay while the sun shines-get an insurance while there is no loss.