Posted on: 28th May 2019
If you were asked this question out of the blue, your immediate response may be no response at all. This is because at first, it sounds pretty complicated but really, is it? Most people are used to presenting tangible things as collateral so it’s okay if even now your instantaneous answer to this question is “no”. The average man on the street starts to think of things like a house, a business, a car, a building of some sort, etc when he hears the word “collateral” and in most cases, this is what holds.
However, there are other forms of collateral just as valid as the ones you’re most likely familiar with and one of such is your life insurance. Your life insurance policy possesses enough value to be put up as collateral for a loan with any (or most) financial institutions. While many may not know this, it doesn’t change the fact that it’s true and it is doable. As a matter of fact, banks are known to approve loans to customers who put up their life insurance as collateral. For them, it is much safer as getting their money back is almost 100% guaranteed.
How Life Insurance is used as Collateral Assignment.
When you sign up for a life insurance policy, you pay a certain amount of money called “premium” on a regular basis. Your premiums sustain the policy, keeping the life insurance intact. This money is what has your life insured and in the event of your sudden death, that money is paid to your beneficiaries (your family, friend(s) or whoever you’ve penned down to receive your insurance claim). This money grows and keeps growing (especially if it’s permanent life insurance and not term life insurance).
When you apply for a loan, you are required to provide a collateral. This is so that if for some reason you are unable to pay back the full amount within the time stipulated by the bank, the financial institution is able to acquire that collateral in order to avoid losses.
When using your life insurance as collateral, it is called “collateral assignment”. What happens here when you are unable to pay back the full amount of the loan is that the bank is allowed to take out the premiums paid into your insurance policy. Safe to say, they become the beneficiaries of your life insurance. Banks are usually very open to this as it gives them a sort of guarantee that they will get their money back no matter what happens (even in the event of sudden death by the borrower).
How does it Work?
There are three simple stages when using your life insurance as collateral. They include;
For starters, you must have established a life insurance policy. This policy must be in your name and no one else. It has to be your typical life insurance policy where your premiums are duly paid on a regular basis. As mentioned earlier, without this, your policy crumbles and will not stand intact let alone be valid enough to be used as collateral.
After establishing and verifying that your life insurance is in order, you can then proceed to apply for a collateral assignment staking your life insurance. Your application is to be made to two offices; one application goes to your insurance company and the other goes to your bank.
After submitting your application the insurance company will then process it. When your application is processed and eventually approved by your insurance company, you must now go on to declare to your bank the intent for the loan you are about to secure. When that is done, you simply await confirmation from your bank for final approval of the loan.
While the idea of using your life insurance as collateral might have initially seemed complicated, you can see now that it isn’t as convoluted as one might think. Using your life insurance as collateral may appear scary to some people and for good reason. You have to make sure you’re able to pay back your loan or you stand a chance of forfeiting your life insurance.
Posted on: 22nd May 2019
The issue of life insurance still baffles a lot of people to date. We have come to learn over the years that many are not well-informed and this usually affects their perception of what life insurance is all about. As a result of this, many folks out there do not know what to expect from purchasing life insurance. It is all a big mystery to them and the ones who know a thing or two, barely understand the basic concept of life insurance.
In order to narrow down how best you can arrive at putting yourself in the know before purchasing life insurance, here are four (4) vital questions to ask yourself before going ahead. They are;
It is called “life insurance” doesn’t necessarily mean you get coverage for life, no, not exactly. However, there are two types of life insurance and both come with different approaches.
One of such is referred to as permanent life insurance; it ensures a financial cover for life (as can be easily assumed when you hear about life insurance). Nonetheless, we also have the term life insurance; this type of insurance refers to one set up for a specified time-frame. It can be for 10, 15, 20 or even 50 years. When the term expires, all bets are off and you can either renew it or change it to permanent life insurance or you can choose to discontinue altogether.
The premiums to be paid for your life insurance is based on the coverage you will receive in addition to some important factors like age, occupation, (family) medical family history, etc. Also, note that permanent life insurance is usually almost 10 times more expensive than term life insurance. Therefore, in deciding which to go with you may need to ask yourself some few other questions. Are you planning to leave an estate or a major investment of some kind? If your plans are that elaborate, then perhaps you can consider permanent life. You can also consider permanent life if you have the funds (you’re always better prepared with permanent life insurance). However, you can decide to pay lesser premiums depending on what you can afford by subscribing to a term life insurance that suits your financial plan.
In figuring out how much coverage you really need, you are going to have to ask yourself one simple question and that is; “what is important to me?” At the barrel end of this question, you’d find the financial needs of your family/dependents, mortgage, car, credit card, debts, medical, funeral and burial expenses and a host of other things. So again, how much life insurance coverage do you really need? We think enough to cater for your dependents when you’re gone.
In order to get the most out of your life insurance coverage, you must consider the existing policy riders. These policy riders vary and are usually affected by what the insurance company allows or offers in conjunction with your personal information. For example, a waiver of premium rider will enable someone who is no longer able to work (either by virtue of injury or disability) desist from paying premiums. It is simply waived. Another example is the children’s life insurance rider, which allows the insured to take out life insurance policies on their children with immense benefits to them. Consider policy riders as those things that sweeten the deal.
When considering life insurance, there are a few key details you must familiarize yourself with in order for you to fully understand what you’re getting into. African Alliance ensures that you’re fully abreast of all the necessary information so that you can make informed decisions.
Posted on: 24th Apr 2019
When you work for an organization, you do your best to give your all. Your time, mental and sometimes your physical abilities are all invested in the growth and development of this said organization. But what does your company, firm or institution give you back in return? How do they appreciate all your efforts? Is it in salaries? Wages? Whatever it is, if it doesn’t come with group life insurance, then it’s simply not enough.
What is Group Life Insurance?
Group life insurance is a life insurance policy that ensures that a prescribed tax-free amount of money is awarded to the beneficiaries (families) of employees currently working in an organization or company. It is made available by the employers of the said organization in the case where the employee dies in active service with the policy still active and ongoing.
By law under the Federal Republic of Nigeria, all employers are directed to make available group life insurance for their employees. Any company who doesn’t make provision for this is in complete contradiction of the laws of Nigeria. It is an employee’s right to have group life insurance set up for him or her.
How Does It Work?
Group life insurance should naturally be an automatic benefit as a registered and duly employed staff of a company. When an employee is admitted into an organization, the employer is obligated to offer him or her group life insurance for free. Even if it may only be a small amount as mentioned earlier, it is the law. This is so that a man or woman who spends most of his or her days (sometimes nights) on the job, is able to secure some form of financial safety-net for their families.
Is Group Life Insurance a Sufficient Coverage for my Family?
We have already established the fact that group life insurance is to be awarded for free to employees of an organization. Nonetheless, a careful review of this policy shows that it provides only a small cover for the beneficiaries of an employee. In many cases, this is hardly sufficient a cover for an employee’s family and/or dependents.
Therefore, it is advisable to take on a life insurance plan targeted at securing the financial future of your beneficiaries. While the importance of group life insurance cannot diminish in any way, it is also pertinent to ensure that whatever coverage you have in place actually covers if not wholesomely, at least more than partially covers your loved ones, family/beneficiaries.
However, note that there is such a thing as ‘supplemental life insurance’ whereby you are able to buy additional insurance in order to improve your life insurance plan under the group life policy that you must have accrued in the workplace. Statistics reveal that nearly 45% of people who have obtained life insurance in as little as less than 5 years ago, did so through group life insurance provisions made available to them in groups such as companies, churches and a host of other entities or associations.
In conclusion, group life insurance should be your barest form of life insurance as an individual. This is because it also comes with its limitations. For example, one may not remain in a particular organization for the entirety of his or her career and the moment you jump ship, your group life policy becomes invalid. This is not to say that it is impossible to break out of group insurance and convert to an individual one, but at what cost!?! Attempting to do this will attract a significant cost implication.
Despite some of the cons of group life insurance, the fact still remains that it is highly recommended by law and for good reason. It is the smallest form of life cover an organization could possibly make available to its employees for all their effort and commitment.
Posted on: 27th Dec 2018
Nigerians are critical people. They are ruled by values decades old and still make decisions based on fractured information even in these modern times. You would think that at least with the emergence of the internet, everybody could cure themselves of any misconceptions or myths but sadly, this is hasn’t proved sufficient. Even in this present day, it will shock you to discover the alarming number of misconceptions that Nigerians hold towards certain things, one of which is life insurance.
For reasons yet unfathomable, many Nigerians have subscribed to misguided notions concerning life insurance. Whether it’s a lack of information that stems from an unwillingness to make their own research or something more profound, these misconceptions have ruled the Nigerian populace for far too long.
We have been able to put together five (5) of the most common misconceptions about life insurance that wax stronger with each day amongst unassuming Nigerians.
Nigerians cannot be blamed for having trust issues when it comes to pay-outs. They are more or less used to getting hoodwinked in these kinds of situations. Hence, they have naturally grown a resistance to trusting organizations that make promises to pay claims whether legally binding or not.
Nonetheless, Nigerians must know that this is a myth, an untrue tale peddled as facts, that life insurance companies such as African Alliance, do not pay claims. But on the contrary, each year life insurance companies, African Alliance included payout billions of naira in claims to Nigerians via various insurance policies.
This particular misconception has to be the chief reason many Nigerians and in fact, many people around the world, hesitate to subscribe for life insurance. No one knows when or how or even why this rumor is all over the place, but if you ask any random person why they are yet to take out a life insurance policy, they are most likely to state that it’s just too expensive.
Some people have overshot the price of life insurance by as much as 200-300% the original amount due to a general misconception. Life insurance is actually quite affordable and depends on factors like gender, age, health status and so on. Plus there are different plans to suit your needs and requirements.
People often assume that only the person making the most money should take out a life insurance policy and this is not true. The truth is, whatever financial aid the other spouse is able to provide with what little income he or she makes, may prove difficult to sustain should anything happen to them or their source of income.
This refers to people who feel taking out a life insurance policy is a one-off affair. The terms of your life insurance plan as at when initiated were tailored to cater for your needs at the time. Time passes and your lifestyle changes, meaning your life insurance plan has to follow the same trend. You could’ve gotten married, had kids or even bought a car or two and this means you’d need to update your life insurance plan to fit into your new lifestyle. You simply cannot do it once and be done with it.
There’s no such thing as being way too young to get life insurance. As a matter of fact, the earlier the better. As a young chap, you are most likely in the healthiest state of your life and life insurance at such a time happens to be way cheaper. Do it now, just do it.
Life insurance policies are made to attend to your needs and to secure a financial future for your family. Do not procrastinate or be swallowed up my fabricated myths and misconceptions that don’t hold water.
Subscribe to a Life Insurance Plan With Us Today.
Posted on: 27th Jun 2018
Insurance, unlike many other financial services is an option not deliberately considered by people who really need it. A few people consider it to be unnecessary while many others consider it expensive, but the truth is underrated.
How much exactly is Insurance?
Insurance is a low-cost form of protection for people that matter to you, yet it provides high value as well. For the record, I have a close friend who has a life insurance policy purchased for as little as N3,033 monthly. This gives him and his family a relatively huge protection of N10,000,000 should there be loss of life within a 10-year period. I cannot bear to think of what could happen to the children and wife financially if anything goes wrong. The peace of mind he has now allows him the full time to keep “hustling” for want of better livelihood, knowing they are taken care of if he is not there to care for them. I also have a life insurance policy similar to this. Imagine the relief I have going to bed at night!
The truth is: I have seen people benefit from Life Insurance policies and I have seen those who have suffered for a lack of it. The cost of items you have purchased and the value you place on them can be protected at a very low cost compared to the purchase price. That is the essence of having insurance policies –for the protection of value.
Insurance is designed to transfer your worries to specialists who have experienced various forms of happiness and sadness from different faces of life, just like you have. This makes it easier for you and me to subscribe to their wealth of experience.
Life happens to everyone; the questions are WHEN will it happen, HOW much will it cost you at the time, WHO ultimately suffers from our ignorance and WHAT can you do now to avoid it?
Think smart. Live above mistakes. Learn from experiences. Insurance is cheap!
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