Insurance Premium and How it Works in Nigeria
We all know insurance costs money. However, a term that is often new when you first start buying insurance is regarded as ‘premium.’ Here, we discuss the basics to help you understand what an insurance premium is and how it works in Nigeria.
What Is an Insurance Premium?
An insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, life, and others.
Once the insured -you- earn a policy, the premium becomes income for the insurer. The premium also represents a liability since the insurer must provide coverage for claims made against the policy. Failure to pay the premium may result in the cancellation of the policy. You can read more on the history of insurance in Nigeria.
How Do Insurance Premiums Work in Nigeria?
When you sign up for a policy in Nigeria, your insurer will charge you a premium. This is the amount you pay for the policy or the total cost of your insurance – as we have established. As the insured, you may choose from a number of options for paying the insurance premium. In Nigeria, an insurance company would require you to pay the premium in installments; either monthly or semi-annually. Some others may require an upfront payment in full before coverage starts.
How Much Does an Insurance Premium Cost in Nigeria?
The cost in Nigeria largely depends on the type of coverage you seek. Subsequently, it also considers the level of risk involved. These factors could make it more or less expensive. Experts recommend that prospective policyholders shop for insurance or work with an insurance professional who can shop premiums with several companies for them.
The price of an insurance premium also depends on a variety of factors including your age and the area in which you live. Read more on what insurance means to the average Nigerian.
How Do You Find the Lowest Premiums?
Most policyholders find shopping around to be the best way to find the cheapest premiums. You may choose to do this as well – shop on your own.
The other option is to try going through an insurance agent or broker. They tend to work with a number of different companies and can try to get you the best quote. Many brokers can link you up with life, auto, home, and health insurance. You may need to be cautious, as some brokers may be motivated by commissions.