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Non-Life Insurance Policy In Nigeria: Types, Features, Benefits & Importance

Non-life insurance is also known as general insurance, and it covers assets like a vehicle, home, travel, accidents, etc. Life insurance is a must-have for every individual. It protects you and your loved ones in multiple ways. Similarly, non-life insurance is a must depending on your lifestyle. However, health insurance is one non-life insurance everyone must-have.

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Insurance in Nigeria can be divided into life and non-life. General insurance is highly popular as these policies provide financial compensation when losses occur. These losses can be caused due to various incidents like accidents, diseases, fire, natural or man-made mishaps, etc

What is a Non-Life Insurance Policy?  

The definition of non-life insurance is, the losses that are incurred from a specific financial event are compensated to the insured this is called non-life insurance. General insurance, property insurance and casualty insurance are other names of non-life insurance. It can be defined as any insurance that is not related to life insurance. People, legal liabilities and properties are covered under a non-life insurance policy. 

Examples of Non-Life Insurance:

There are some examples of non-life insurance policies that completely justify the meaning of the term. General insurance policy examples are homeowners policies, motor insurance policies, marine insurance, damage coverage from fire, calamities, theft, travel insurance or any online breach incident related to cybersecurity.  It is very difficult to measure the amount of damage caused by online incidents as the probability of occurrence of these risks is extremely difficult to ascertain. However, these can be covered with the help of a non-life insurance policy.

Key Features & Benefits of Non-Life Insurance Policy:

Non-life policies features include the following:

  1. The amount specified in the policy is the sum insured which, during the policy period, symbolizes the insurer’s maximum liability for claims. The insurer may specify the available amount of sum insured.
  2. The policy period of a non-life insurance plan is usually short, i.e., one year. The duration can be longer depending upon the type of insurance.
  3. The premium of the policy is paid right before the insurance company issues the policy. When an application for insurance is received by the company, they assess the risk involved depending upon the type of cover required. For example, under health insurance, the age, medical history, and current medical status of a person will be taken into account before the insurance policy is issued.
  4. Any claim is not fully borne by the insurance company. The policy holder needs to pay a small share, this share is called a deductible.
  5. If no claims are made under a general insurance policy, then the policyholder is awarded a discount called No Claim Bonus. This is a cumulative discount on the premium of the policy that increases till it reaches a certain number.

The benefits of a non-life insurance policy are:

  1. In case of health insurance, financial help is provided at the time of a medical emergency.
  2. It  is mandatory by law to buy a third-party motor insurance policy. It can take care of the compensation to be paid to the third party in case of damage to property or life.
  3. Home insurance covers the residential property of the policyholder against many unforeseen incidents, like fire, burglary, natural calamities, riots, etc. 
  4. Travel insurance plans offer insurance coverage to senior citizens and children as well. These help with issues like loss of baggage, accidents, loss of documents, etc. in a foreign land.
  5. Commercial insurance benefits the businesses with policies like employee benefits insurance, shopkeepers insurance, property and marine insurance, etc.

Policies of non-life available in Nigeria:

The types of non-life insurance policies in Nigeria are:

  • Marine insurance
  • Home insurance
  • Travel insurance
  • Health insurance
  • Motor insurance
  • Commercial insurance

In Nigeria, insurance policies for mobile, shop protection and bicycle are also provided under non-life insurance.

Is Non-Life Insurance Different From General Insurance?

No, general insurance is not different from non-life insurance, both are typically the same. General insurance or non-life insurance provides coverage to people, legal liabilities and properties. 

Difference Between Life Insurance and Non-Life Insurance:

Life insurance provides a lump sum amount of sum assured at the time of maturity or in case of death of the policyholder. Non-life insurance policies offer financial protection to a person for health issues or losses due to damage to an asset.

Comparison basisLife insuranceGeneral insurance
DefinitionLife insurance protects against life risks where the insured individual is promised by the insurance company for uncertainties and ambiguities of life-related to death.The insured individual is promised to be compensated by the insurance company for the damage caused due to an unfortunate circumstance or any loss. The valuable things of people are protected by general insurance.
Policy PeriodLong-termShort-term
Nature of the policyLife insurance is acknowledged as an investment, and it is not a contract of indemnity.Whereas general insurance can be termed as indemnity’s contract.
The insuredThe policyholder receives the benefits of the insurance coverage.The policyholder and the other people insured under the policy get the benefits of the insurance coverage.
ClaimsThe sum assured is paid at the maturity of the policy or death of the policyholderClaim is processed as per the damage or financial loss suffered by the policyholder.
Cost of the policyDepends upon the amount of sum assured offered by the insurance policyDepends upon the value of the insured asset.

What is the Difference Between Participating and Non-Participating Life Insurance?

A participating policy in life insurance is a policy that offers a share of the insurer’s profits to the policyholder. The profit is paid out in the form of bonus or dividends. Whereas a Non-Participating is the one that does not offer a share of the company’s profit to the policyholder. Here is a table that shows the difference between the types of Life Insurance policies:

Type of differenceParticipating policyNon-Participating policy
MeaningThe policy offers a share in the company’s profit.There is no profit sharing in a non-participating policy.
Bonus PayoutAnnualNil
PremiumHigher than non-participating policy due to possible profit sharing.Lower than a participating policy.
BenefitDual benefit of insurance and a share in company’s profit.No additional benefit apart from insurance coverage.
ExamplesUnit Linked Insurance Plans is one of the best examples of a participating policy.Term insurance is an example of a non-participating policy.

How to Apply for Non-Life Insurance? 

The person looking for a non-life insurance policy should be ready with a few details like name, identity proof, residential proof, proof of ownership of the asset to be insured. After choosing a suitable insurance company, one should approach the insurer and submit the application or proposal for buying an insurance policy. 

Importance of Non-Life Insurance Policy: 

Here are the reasons why buying a non-life insurance policy are important:

  • Financial security at the time of need is one of the major upsides of buying a non-life insurance policy.
  • The insurance company will bear the cost of a financial liability. Thus, such risks are carried over to the insurance company from the policyholder.
  • Peace of mind related to possible financial crises.

Inclusions of Non-Life Insurance Policy:

The inclusions of Non-life insurance are specific to the type of policy being purchased. For example, the inclusions of a Motor Insurance policy are Third-party Liabilities, Own Damage (Comprehensive policy), and a Personal Accident Cover. Under Health Insurance Hospitalization Costs, the cost of minor surgeries, ambulance charges, etc. is included. The inclusions of your insurance policy will be mentioned in the policy document.

Exclusions of Non-Life Insurance Policy: 

Some general exclusions of a Non-Life policy are raising a claim when the policy is not active, representing false or fraudulent information, producing fake documents, not raising a claim within the stipulated time, and not following the claim process diligently.

Things to Remember While Buying/Renewing Non-Life Insurance Policy Online:

  1. Check the terms and conditions of the insurance policy before policy renewal or purchase. They are available online on the insurance company’s website. Also, go through the fine print. In case of doubts, do not hesitate to get them cleared by contacting the insurer before you buy the policy.
  2. Compare insurance plans from different insurance companies and review coverage. Also compare the cost of each plan.
  3. The most important thing to remember is buying a policy that is suitable for your needs. Do not buy coverage that seems unnecessary but good to have. It will only increase the premium. 

Why is it Important to Renew Non-Life Insurance Policy? 

The uncertainties of life can be heavy on everyone, thus, buying a non-life insurance policy is important. Since the duration of such policies is short, it is equally important to keep the policy active by renewing it upon expiry. It will help you avail continuous coverage against financial liabilities and make a claim for an unfortunate incident.

How to Claim Non-Life Insurance Online: 

Making an online claim is easy and can be done instantly via the insurance company’s website or their mobile application. Get in touch with the insurance company to understand the claim process and the set of documents that will help in getting the claim settled. Once you are ready with the required details, login to your account and click on “raise claim”. Attach the supporting documents and send the details to the insurance company.

Why Choose a Non-Life Insurance Policy by First Adequate Benefits Insurance Brokers Ltd?

FIRST ADEQUATE BENEFITS INSURANCE BROKERS LTD is an insurance broker that is gaining the trust of millions of people in Nigeria. One should choose to buy a non-life insurance policy from FIRST ADEQUATE BENEFITS INSURANCE BROKERS LTD due to the following reasons:

  1. Quick claim settlement: FIRST ADEQUATE BENEFITS INSURANCE BROKERS LTD strives hard to settle a claim as quickly as possible.
  2. At First Adequate, we treat all your information with utmost confidentiality, and this form part of the Terms of Business Agreement that you enter into with the us.
  3. Minimum Follow-up: All the hassle and follow-ups will be carried out by FIRST ADEQUATE BENEFITS INSURANCE BROKERS LTD on your behalf. You just have to sit back and focus on other important things.

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