INSURANCE
LIFE INSURANCE IN NIGERIA: All you need to know!
LIFE INSURANCE IN NIGERIA: All you need to know!
Insurance is really an interesting plan that caters for every financial needs of an individual. This is achievable only when an individual transfer some risks associated with living to the insurance company.
Whilst many has adopted the habit of insuring their valuables to avoid or limit financial loss; ranging from cars, Luxury Gadgets, Houses, Businesses amongst others, Many still find it hard to insure the most necessary aspect which has made the achievements of the aforementioned materials (valuables) possible.
Human life is the most and crucial part of Insurance. Without the protection of life, in form of an insurance cover, many of the things an individual has achieved might suffer mishandling, or even be transferred to the wrong hands.
While it is common to see people insuring their cars , houses, costly automobiles amongst others, you hardly find substantial number of people taking a bold step to insure their life. So I decided to make enquiries into why this is so. And I was surprised to find out that it is because many people see life insurance as a death sentence especially in Nigeria.
But life insurance is far from this; hence this article seeks to throw more insights and give more information on what life insurance is, and how it is the most crucial aspect of every insurance in Nigeria.
LIFE INSURANCE MEANING
First of all , Life Insurance is not a death sentence as thought by many. Rather; Life insurance simply refers to the insurance that provides coverage for an individual life that is insured in terms of financial benefits whilst alive, and even in death.
Life insurance provides funds to compensate you when you lose an aged Father, Mother or Uncles amongst others, as well as the loved ones of any breadwinner of the family who encounters premature demise.
Life insurance is the type of insurance that help ensure that human life is not a liability but rather an asset. Knowing that human life is very fragile and that life is full of uncertainties, with a life insurance cover, the associated liability that might ensue at ones demise is totally avoided or better still turned into an asset.
How Human Life outside of Insurance Can Become A Liability
Human life as is well known, is very fragile, hence when a man dies , a financial obligation usually ensue. But when the demised life has no form of life insurance cover, the survivors of the deceased now bears the burden of utilising their income set aside for other needs, to cater for the funeral expenses, and in most cases; those who had no savings at all end up incurring debt through loans so as to do the needful at that point in time – this is a typical example of how human life has become a liability for those he/she left behind. This is common amongst the middle class and poor class folks.
How Human Life With An Insurance Can Become An Asset
An asset is something that at least brings you some amount of ease and profit. Hence, with the knowledge that when a man dies, it automatically means that the breadwinner is dead, the husband is dead, the person we call father is dead, and the income dies; all these in one way or the other has its repercussion on the survived lives. But then, these repercussions that would have ensued, can be translated to asset and therefore be mitigated…
You Ask How? Read on…
With life insurance you can get assurance for; Food, Shelter, Education, Prestige, Dignity, amongst other needs of life. Hence, when an individual buys a life insurance cover as protection for his/her life, and along the line passes on prematurely, the life insurance company will make available funds in terms of compensation that will act as that support the breadwinner had previously been providing to the family before his untimely demise.
And thereby affording the family to keep having the lifestyle they’re used to in terms of food, shelter, education, and prestige. In most cases the benefits derived(dead or alive) from subscribing to a life insurance is usually higher than what an individual invested in terms of premium payments. Hence the profit or benefits derived is higher than the invested premium.
LIFE BENEFITS OF LIFE INSURANCE
In life insurance as well as other form of insurance, there is nothing as such as generic coverage. Rather, each plan you decide to go for has its scope of coverage and all; hence the need to always confirm what a particular policy covers and the degree of coverage.
Therefore, in life insurance there are different benefits attached to diverse life insurance policies. Some are Death benefits while others are benefits one can enjoy whilst still living.
Some of the insurance companies in Nigeria like; Enterprise Life Assurance, has some benefits that one can enjoy in their whole life insurance policy. This means that it is not only In death that an individual gets to enjoy the benefits in insurance.
For example;
- There is the benefits of Ten percent (10%) cash back every two years of total premium paid. And this doesn’t affect your total sum assured selected.
- There is also the benefits of adding a cash account to the plan which earns you six percent (6%) interest on the savings. And you can leverage on this funds to invest into real estate deals and have your money grow without tax deductions.
- There’s a monthly premium holiday by which you don’t pay premium every January of the year. This also serves as a way of making you enjoy your money in that month while still retaining your coverage.
- In case critical illness, life insurance plan will enable you with the needed funds to cater for the medical treatment.
TYPES OF LIFE INSURANCE
There are three types of life insurance in Nigeria. They are;
- Whole life insurance plan.
- Term life insurance plan.
- Endowment plan.
WHOLE LIFE (Permanent) INSURANCE PLAN
This type of insurance plan provides coverage throughout the lifespan of the insured. And payout is only triggered when death occur (death benefits), while some companies also payout after the year specified matures (maturity benefits).
However, this plan also has a saving account called “Cash Account” which gives you the opportunity to accumulate cash value with interest.
The funds in the cash account can be accessed while the individual is living, and channeled into other businesses or investments; such as real estate and stocks. Premium paid on this plan is usually fixed, as well as the sum assured that will be paid out, except of course an individual added some riders, which enables you to enjoy more benefits with increase in premium paid as well.
TERM LIFE INSURANCE MEANING
This type of life insurance plan only provide coverage for life for as long as the specified duration of years. Usually between Ten to forty-five years (10-45 years).
Hence, once nothing happens between the specified years, no sum assured will be paid to the individual. Except of course he has successfully enjoyed the peace of mind within those years. The event that will trigger payout has to happen within the years specified in this contract before an individual receive his/her benefits.
This is why it is advisable when picking a term life insurance, to pick a longer years cause nobody knows what will happen and it is safer that way than opting for few years.
In Nigeria, the term life insurance premium is higher to compare with the whole life insurance premium. As well as the sum assured in the plan.
As with the whole life insurance, the term life insurance also has a cash account which one can save and accumulate cash value with interest on it.
ENDOWMENT PLAN WITH LIFE INSURANCE COVER
Have you encountered a scenario where an insurance company is pitching an education plan for you and you are wondering why that is happening? I’m sure you have. Well that’s what endowment plan caters for amongst others.
An endowment plan affords you the opportunity for you to finance a particular goal or education plan of a loved one. This offers you a life cover as well as savings and investment plan for any dream or project of yours. You can actually pick up an educare plan with Enterprise Life Assurance company to enjoy this benefit.
The good thing about this their endowment plan especially the educare plan, is that if along the line of the policy term, an individual suffers premature death, the education goal that was intended for the loved ones won’t be halt. As this company will continue paying the premium on the deceased behalf to ensure that the child completes his/her school.
There is also other savings plan under the endowment policy plans and many companies call it different names. So you can actually ask a life planner to guide you as to how to go about it if you chose to buy an endowment plan.
Another good aspect of this savings plan with a life cover is that, you stand to earn interest in the savings plan selected..
HAVING TWICE OR MORE COVER IN LIFE INSURANCE AS AGAINST PROPERTY COVER
You know that in property coverage; be it motor, house, business, amongst others, you cannot cover them twice. Cause it’s against the principle of indemnity in insurance. But when it comes to Life insurance, you can actually have twice or more coverage for one life if you can afford to pay the premium.
Reason is because, Life insurance provides compensation when a negative even occur, and being that human life can’t be quantified, and no amount of money can bring back a deceased soul that was lost back to life, hence the need for an individual to purchase more coverage he can afford as long as it’s in life insurance. Hence, the need to plan for the worst and expect the best! One can then use life insurance as a solid financial foundation on which wealth can be built.
FEATURES OF LIFE INSURANCE
Below are some of the features in life insurance, they are;
- The tenure is between 5-years and above
- The premium payable differs by the type of plan opted for, as well as the benefits to be enjoyed.
- The contract is usually issued in the name of the policy holder who paid for the plan.
- Payout is triggered when death occurs, or at the maturity of the plan.
- You can cover yourself twice or more as well as any loved ones.
- Life insurance also has savings and investment account that accrue interest called cash account as one of the riders.
IMPORTANCE OF LIFE INSURANCE
- With life insurance cover, you enjoy peace of mind; Living in anxiety or fear of tomorrow is the worst kind of nightmare, especially when you want everything taken care of for your family. But with an insurance cover, that anxiety automatically disappears, knowing that those who depend on you won’t suffer if something goes wrong.
- It gives protection to the lives of many you care about.
- Life insurance can help replace income for you in case of total permanent disability or critical illness.
- Life insurance can serve as the most effective way of leaving behind a “will”. Seeing the beneficiaries nominated can’t be contested.
- With life insurance, educational expenses of our children can be assured for years without disruption.
- With life insurance, you can cover the lives of your immediate family and extended family who are above 76 years ( enterprise life whole life insurance plan does this). And stand the chance of giving them a befitting burial after they have lived a complete life.
- With a life insurance, you stand the chance to avoid tax payment as a benefit. So the sum assured payable aren’t taxable.
- Life insurance endowment plan can act as a back up source of retirement income. As one can’t have enough of retirement income, seeing the cost of living are not fixed, and the time value of money in the near years ahead won’t be the same with money deposited already.
- As a business, Having a life insurance as part of employee benefits, will help your business retain resourceful and capable employees that will help pilot your business to great heights.
CONCLUSION
Life is full of uncertainties, and human life is fragile; anything can happen at any time. And it is with life that an individual can acquire every other properties and luxuries of life, hence the need to pay more attention to life insurance policies before buying other plans that covers our properties. No one knows what the future holds. Hence, in as much as we expect the best out of life, it is always safer to plan ahead for the worst. This can happen by just simply walking into an insurance company and getting a life cover today, or better still reach out to a life planner to help you out.
I will leave it at this then; Life insurance is the solid financial foundation on which the wealthy individuals builds their financial home. And the best time to buy it was yesterday, the next best time is NOW! Cause tomorrow is not promised!
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BANKING
The Impact of Supply Chain Disruption on Business Operations and Financial Performance
The Impact of Supply Chain Disruption on Business Operations and Financial Performance
Supply chain disruptions are very commonplace in today’s interconnected global economy, affecting organizations in a variety of industries. These interruptions may have far-reaching effects on a company’s financial performance in addition to its commercial operations. In addition to offering techniques to reduce the risks involved, this article seeks to give readers a thorough grasp of how supply chain interruptions affect corporate operations and financial performance.
MEANING OF SUPPLY CHAIN DISRUPTIONS
Any incident or event that prevents information, services, or items from smoothly flowing through the supply chain network is referred to as a supply chain disruption.
It describes any situation or incident that stops the movement of products, services, or data inside a network of supply chains. These interruptions may happen at any time during the supply chain, from suppliers of raw materials to final consumers, and can lead to disruptions, shortages, higher expenses, and eventually affect the chain’s overall effectiveness and performance.
Disruptions to the supply chain can be divided into two categories: internal disruptions that occur within the company and external interruptions that occur outside the company.
TYPES OF SUPPLY CHAIN DISRUPTION
Disruptions to the supply chain can come from a variety of sources and take many different shapes. Typical forms of supply chain disruptions include the following:
- Natural Disasters: Incidents like hurricanes, floods, tsunamis, and wildfires can cause damage to transportation networks, destroy infrastructure, and force the closure of manufacturing and distribution facilities.
- Geopolitical Events: The movement may be impacted by trade disputes, tariffs, sanctions, war, terrorism, political instability, and changes in governmental policy. moving commodities across international borders, sour commercial ties, and cause bottlenecks in the supply chain.
- Supplier Issues: Delays in the delivery of components or raw materials might result from issues with suppliers, such as bankruptcy or sudden changes in production capacity.
- Transportation Disruptions: The supply chain as a whole may be impacted by delays in the delivery of goods caused by strikes, fuel shortages, accidents, port congestion, and other transportation-related problems.
- Demand Surges or Drops: Unexpected fluctuations in customer demand, such as sudden increases in orders or decreases in sales, can result in mismatches between supply and demand, which can cause delays in manufacturing and delivery.
- Cybersecurity Breach: Information technology system malfunctions, cyberattacks, or data breaches can impair critical data, interrupt the flow of products and services, and offerings.
- Quality Control Issues: Recalls, manufacturing halts, and supply chain interruptions may result from issues with product quality, safety, or compliance.
- Pandemics and Health Crises: Situations like the COVID-19 pandemic can result in worker shortages, manufacturing closures, travel restrictions, and interruptions to international supply chains.
IMPACT ON BUSINESS OPERATIONS
Disruptions to the supply chain can have a big effect on how businesses operate, impacting many different parts of what they do. Among these effects are the following:
- Production Delays: Supply chain disruptions may cause delays in the delivery of components, finished goods, or raw materials, which may cause production to halt or slow down. This may affect a business’s capacity to reach production goals and promptly complete orders from customers.
- Increased Costs: Expenses associated with carrying excess inventory, accelerating shipments, finding alternate suppliers, and putting emergency plans in place can all rise as a result of supply chain interruptions. These extra costs have the potential to weaken profit margins and lower overall financial performance.
- Customer Dissatisfaction: Customers may become dissatisfied and lose faith in the business as a result of delays in the delivery of goods or services. Customer loyalty and the company’s reputation may suffer as a result.
- Inventory Management Problems: Disruptions in the supply chain may result in inventory levels that are out of balance, with an abundance of certain commodities and a deficiency of others. This may result in ineffective inventory management, a lockup in working capital, and higher carrying costs.
- Operational Disruptions: When important vendors or partners in logistics are unable to deliver merchandise services as anticipated, it may cause daily operations of a business to be disrupted, affecting departmental productivity and efficiency.
- Risk of Loss of Market Share: Prolonged supply chain interruptions increase the likelihood that a company may miss out on sales opportunities, lose market share, and experience other negative effects. Those with more dependable supply chains could have an advantage over rivals.
- Legal and Regulatory Issues: When a supply chain is disrupted, there may be legal repercussions, including breaking contracts, missing deadlines, and breaking rules. Legal issues, fines, and reputational harm to a business may arise from this.
- Long-term Business Impact: A company’s financial performance, competitive position, and general viability may all be negatively impacted by protracted or severe supply chain disruptions. It might impair the business’s capacity to sustain connections with clients, vendors, and other business associates.
- Communication and Collaboration Challenges: Interruptions can make it difficult for supply chain participants to coordinate, make decisions, and solve problems. Both efficient crisis management and general operational efficacy may be hampered by this.
IMPACT ON FINANCE PERFORMANCE
A company’s financial performance can be significantly impacted by supply chain disruption in a number of ways, including:
- Increased Expenses: Supply chain interruptions frequently result in greater expenses for items like faster shipment, purchasing from more expensive alternative suppliers, keeping extra inventory on hand, or putting emergency preparations in place. The company’s profitability may be directly impacted by these added expenses.
- Revenue Loss: Supply chain disruptions may cause delays in completing client orders, which may result in a potential loss of revenue because lost chances to close deals. If there are delays or product shortages, customers can also look for other suppliers, which would mean fewer sales for the business.
- Inventory Write-offs: When there are disruptions in the supply chain, inventory levels might become unbalanced, with certain items having excess stock and others lacking. As unsold or outdated inventory builds up and negatively affects the company’s financial condition, this may lead to inventory write-offs.
- Contractual Penalties and Legal Expenses: If supply chain disruptions cause a party to miss contractual obligations, there may be penalties and legal expenses. Conflicts involving partners, suppliers, or customers may lead to legal action and more expenses.
- Long-Term Financial Impact: Extended or severe disruptions to the supply chain may have a long-term effect on the financial performance of the business, limiting its capacity to produce revenue and sustain long-term profitability. Stock performance and investor confidence may potentially be impacted by this.
- Working Capital Restraints: In order to minimize disruptions caused by supply chain disruptions, the business may need to store excess inventory or pay in advance for faster transportation. Money that may have been spent for other company endeavors is diverted by this.
- Business Continuity Costs: In order to avoid or lessen supply chain interruptions, businesses may need to make investments in business continuity and risk management techniques. These costs can have an adverse effect on their bottom line.
- Stock Market Reaction: When businesses see significant interruptions in their supply chains, investors may react negatively, which could lead to a drop in stock prices. The market capitalization of the company could be impacted if investors lose faith in its capacity to handle risks.
- Legal and Regulatory Repercussions: Disruptions to the supply chain may result in legal and regulatory repercussions, such as breaking contracts or neglecting to fulfill duties to customers. A company’s reputation and financial performance can be severely impacted by lawsuits, fines, penalties, and compliance expenses.
STRATEGIES FOR MITIGATION
Businesses can handle supply chain disruption and reduce its impact on operations and financial performance by implementing a number of mitigation techniques, such as:
- Diversify Your Supplier Base: Dependence on only one source might make disruptions more likely. Increasing the variety of suppliers helps lessen the effect of interruptions from a particular source.
- Supply Chain Insight: Put in place systems and technology that offer real-time insight into every aspect of the supply chain, including transportation, production status, and inventory levels. This visibility aids in identifying anticipate possible problems and make proactive mitigation strategies possible.
- Risk Assessment and Management: Perform thorough risk analyses of the supply chain to find possible weak points and put risk management plans in place to lessen their effects.
- Contingency Planning: To handle and minimize supply chain interruptions, create and update backup suppliers, logistics routes, and alternate sourcing choices.
- Cooperation and Communication: Create effective channels for cooperation and communication with consumers, logistical partners, and suppliers. Having solid connections and open channels of communication will make it easier to deal with interruptions in a cooperative and efficient manner.
- Inventory Management: Use agile inventory management techniques to balance supply and demand, keep ideal inventory levels, and lessen the effects of shortages and surpluses brought on by disruptions.
- Adoption of Technology: Invest in Supply chain resilience and agility can be improved by utilizing technology like blockchain, supply chain management systems, and predictive analytics.
- Financial Risk Management: To lessen any financial effects, assess your exposure to financial risk as it relates to supply chain interruptions and take into account risk transfer strategies such supply chain insurance.
- Technology Adoption: Supply chain visibility, traceability, and control can be improved by utilizing cutting-edge technologies like blockchain, data analytics, automation, artificial intelligence, and the Internet of Things (IoT). By facilitating real-time monitoring, predictive analytics, and prompt decision-making, these technologies improve resilience and lessen the effects of disruptions.
- Scenario Planning: Create and maintain scenario plans that take into account a range of possible interruptions and how they can affect financial performance and business operations.
CONCLUSION
Disruptions in the supply chain significantly affect financial results and commercial operations. Companies need to proactively identify risks, improve teamwork, use technology, and create strong contingency plans in order to successfully traverse these issues. Businesses may reduce the effects of disruptions, enhance financial performance, and preserve a competitive edge in the complex and unpredictable business world of today by putting these mitigation techniques into practice.
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