If anything, the exact opposite is true. There is something that I heard way back in 2004 that has stuck with me till this day. A lady who had recently lost her husband shared an all too familiar story of hardships that families go through when their breadwinner passes suddenly. Rent, school fees and other bills were piling up and she couldn’t keep up. She was fortunate that her husband’s family was supportive but their charitable spirit didn’t last long. After about a year, she was truly on her own.

She found a life insurance policy document amongst her late husband’s documents and presented it to the company the next day. Her husband had saved up close to N1 million with this company and had a life insurance cover of N5 million. She was entitled to all of it. That may not sound like a lot of money today but what the lady said, while holding back tears was, “Insurance is not for the dead, it’s for the living.”

That money didn’t change their lives but it meant that they could live in their home for at least one more year, the kids could go to school for at least one more year and most importantly, the money gave the lady a buffer period to find her feet financially. She said that was the best thing her husband ever did for his family.

Another conversation comes to mind. I was selling a child education plan to some “big men” in a recreational club and they all saw the benefit of the product. They were all in their late 40s to early 50s and the policy terms were that if they passed away during an academic year, a lump sum of N3 million would be paid directly to their child’s school and the account would be debited for all expenses until it ran out. More so, the product cost only N5,000 a term; the kind of money they spent in one night without even thinking about it. They all signed up on the spot except for one of them.


The gentleman who didn’t sign up insisted that he had no need for insurance. The property he had amassed for his wife and kids (in their names) were enough to see them through if he was no longer in the picture, he boasted. Suffice to say, I (and his friends) couldn’t convince him to take up the policy. What he was effectively saying was that his family should sell their inheritance, their birth right if he dies because he didn’t want to spend N5k.

As much as I disagreed with his philosophy, I will admit that on some level he had a point. The rich can possibly get away without buying insurance if they chose not to buy. The richest man in Africa for example has a net worth larger than the balance sheet size of the whole insurance industry put together. What he needs more of is estate planning provided by a greed of lawyers (yes, that’s how you say it), trust fund administrators, tax consultants and other professionals. If his car got stolen, he probably could buy a new one the next day, cash down and if he passed away suddenly, the assets distributed in his will could set up his family for generations without the need for insurance.

An employee of the richest man in Africa however, shouldn’t have any delusions about the need for insurance no matter how much he/she is being paid. If your salary forms a major part of your income, you need to buy insurance, period! If you are a self-employed business owner with “good” months and “bad” months, you need life insurance even more because there is an even smaller safety net for your family.

Insurance doesn’t pertain just to life and death however. If you were to lose your car due to theft or fire, can you afford to replace it? If yes, how long will it take you? 3 months, 1 year? Would you have to borrow a portion of the money? In the meantime, you would be back to hoping on buses or waiting for colleagues going your way to give you a ride home.

Even if you have already saved up enough to replace the car immediately, those savings are not being accumulated to replace a car; they are meant for something useful like furthering your education abroad or a deposit for a home of your own.

Enough Talk, Act Now

Insurance is a safety net and counter intuitively, the closer to the floor you are, the more important it is to have an insurance safety net. It can be the difference between being middle class with a positive outlook and being plunged into abject poverty.

I know a family who moved from their home in Victoria Island to a rented flat because their house got burned and they couldn’t afford to restore it. So, if anybody tells you that insurance is for the rich, tell them they are wrong and please educate them because now you know better. Remember, insurance is for the living, it’s for your family, not for you.

If you would like to know more about how you can secure your family’s future with a N1 million insurance policy for less than N1,000 a month, drop me an email at [url] mailto:insurance@talkingmoney.com.ng[/url]




To follow the money myths series and to read other articles about personal finance, visit www.talkingmoney.com.ng