How insurance can safeguard a child’s future in Nigeria
February 3, 2025189 views0 comments
Joy Agwunobi
Amid Nigeria’s rising inflation and economic hardship, many parents remain focused on insuring their homes, cars, and businesses, often overlooking a crucial aspect which is securing their children’s future.
With the soaring cost of living and growing financial uncertainty, insurance products tailored for children are emerging as a critical tool for safeguarding their long-term well-being. From education plans to health coverage, these policies offer a financial cushion that ensures children have access to essential services, even in times of crisis.
As families struggle to navigate Nigeria’s economic landscape, the role of child-focused insurance is more important than ever.
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Nigeria’s economy has been under immense strain in recent years, with inflation rates reaching record highs essentials such as food, housing, healthcare, and education are becoming increasingly expensive, putting enormous pressure on household incomes. Many families are forced to prioritise immediate survival over long-term financial planning, leaving their children’s future uncertain.
In such challenging times, insurance is often viewed as an unnecessary expense rather than a financial safeguard. While many Nigerian parents prioritise protecting their physical assets such as cars, homes, and businesses, few actively invest in policies designed to secure their children’s future.
Insurance, in essence, is a financial safety net that helps individuals and families recover from unexpected losses as unexpected events such as job loss, medical emergencies, or the death of a breadwinner can leave children vulnerable, disrupting their education and overall well-being.
According to experts, insurance can provide much-needed support to families in times of crisis, cushioning the blow of unexpected expenses and safeguarding a child’s future. Parents can invest in life insurance plans for their children that offer long-term benefits. These policies are designed not only to cover the costs of medical treatments or accidents but also to provide a foundation of financial security that can grow over time, helping children when they eventually step out into adulthood.
One essential form of insurance for children is child education savings plans. These are financial products designed specifically to help parents save money for their children’s education. With the rising cost of education, parents often worry about how they will afford their children’s schooling. Education insurance plans can guarantee that children’s education will be fully funded, even if something happens to the parents.
This can alleviate a lot of pressure on families, especially considering how many young Nigerians face challenges in accessing quality education due to rising tuition fees and other financial obstacles.
In addition to education insurance, parents can also look into other policies such as life and health insurance. Healthcare is an area that can quickly become financially draining, especially when unexpected medical emergencies arise. A health insurance policy tailored for children ensures that they are covered for medical expenses, from routine check-ups to more serious health issues.
The Leadway Education Savings Plan is an example of a savings plan designed to cover a child’s educational expenses. According to Leadway Assurance, this plan offers two types of options:
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Education Savings Plan with Insurance: This plan allows parents to save money for their child’s education in a tax-efficient manner while also providing life insurance cover for the policyholder. The savings plan is geared toward long-term educational goals, spanning a minimum of 3 years and a maximum of 20 years. The policy also includes an insurance cover that pays the sum assured plus the accumulated amount (at the time of the claim) in the event of an accident or illness leading to disability.
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Education Savings Plan without Insurance: This option is typically offered by commercial banks or other financial institutions. It allows parents to save according to their discretion, either in specified or unspecified amounts, over a given period, solely for their child’s education. These plans still provide the benefit of ensuring that money is set aside for educational expenses, even without the insurance cover.
These education savings plans provide many benefits, including tax advantages, investment growth, and financial security. By investing in diversified portfolios, the firm noted that parents can potentially earn higher returns than they would from a traditional savings account. Moreover, these plans offer peace of mind, knowing that a child’s educational future is secured.
When it comes to securing a child’s future education, the company emphasised the importance of early planning, noting that starting early allows investments to grow over time, even if contributions are small. Setting realistic goals is also crucial, as parents need to determine the required savings based on their financial situation.
Additionally, diversifying investments helps minimise risks while maximising potential returns, it further noted that staying informed about changes in the education landscape is equally important, ensuring that savings plans remain aligned with evolving costs and financial conditions.
In addition to the Leadway Education Savings Plan, Cornerstone Insurance also emphasises the importance of securing children’s futures through specific insurance plans.
According to Cornerstone Insurance, parents should consider purchasing the following six essential plans for their children:
1. Children Education Fund
The first plan in the order of prominence is the Children Education Fund. Since the children are still in school, it’s best to ensure that their education never stops for any reason. The Children Education Fund is a savings plan that provides a lump sum over a given period for the education of one’s children. If the policyholder dies during the agreed period, the fund balance plus the sum assured on the plan (outstanding premium as at date of death) is paid to the named beneficiary. But if there is no death, the policyholder gets his total contribution with accrued interest at the expiration of the agreed period.
2. School Fees Guarantee
Similar in concept to the previous plan, School Fees Guarantee ensures the continuity of a child’s education in the event of job loss or untimely death of the fee-paying parent. The policy allows proceeds to be paid directly to a school rather than to individual(s). This helps prevent unwanted and unexpected interruptions to a child’s educational pursuits caused by the job loss or death of the parents.
3. Life Insurance
As the beneficiaries of their parent’s estate, children can get financial compensation to take care of their needs if one or two of their insured parents were to die. Life Insurance lets a policyholder pay a very small amount (premium) to enjoy a very large cover. The lump sum is then paid to a named beneficiary of the assured in the unexpected death of the policyholder.
4. Gadget Protection Plan: For families relying on technology for online learning, this plan covers damages to gadgets such as smartphones, reducing the costs of repair and replacement.
5. Travel Insurance: This insurance provides compensation for disruptions or losses during travel, ensuring that a child’s trips to school, whether by air or road, are financially protected.
6. Health Insurance
Health Insurance remains one of the most important policies for children, making quality healthcare accessible and affordable even in the absence of their parents. With this plan, medical treatment can be easily accessed through an HMO-approved hospital without parents having to disrupt their work schedules. By investing in a family health insurance plan, parents won’t have to worry about rising medical bills.
Despite its numerous benefits, insurance penetration in Nigeria remains low due to several persistent challenges. These include a lack of awareness, financial constraints, mistrust in insurance companies, and cultural or religious beliefs that discourage uptake.
However, this trend is gradually changing as ongoing reforms by the National Insurance Commission (NAICOM) help to improve public understanding of insurance. The sector has shown notable progress in recent years, with data from NAICOM indicating significant growth. In Q3 2024, Nigeria’s insurance industry recorded a 60.9 per cent year-on-year increase and a 44.3 per cent rise from the previous quarter.
The non-life insurance segment played a pivotal role in this growth, accounting for 68.9 per cent of the total premium, which amounted to N808.4 billion. Meanwhile, the life insurance segment contributed 31.1 per cent of the total premium.
While this is encouraging, many Nigerians still do not fully understand the advantages of securing insurance for their families, especially for their children. However, the reality is that the earlier parents begin securing insurance products for their children, the better the financial foundation they will provide. In a time when the economy is fluctuating and inflation is eroding purchasing power, investing in insurance can act as a safeguard against financial uncertainties.
While insurance may not be top of mind for many Nigerian parents, especially amid the challenges brought on by inflation and rising living costs, it is clear that insurance plays a vital role in securing their children’s future. By providing financial protection and stability, insurance products for children can offer a sense of security, knowing that their children will have something to rely on as they transition into adulthood.
As the insurance sector in Nigeria continues to grow, parents have more opportunities than ever to invest in policies that will safeguard their children’s future.