Insurance 24 celebrating the global money week!!

Zimbabwe celebrating global money week.

HARARE, As we celebrate global money week, here we try to demystify insurance in general for the benefit of young people.

What is global money week?

This is a global money alertness campaign on the importance of financial coaching, financial attachment and entrepreneurship skills for young people.

At insurance 24 we have seen that there is no financial education without insurance, there cannot be financial attachment without mentioning insurance and as a result we have also joined the world in celebrating the global money week through this article which basically introduces insurance to young people.

What Is Insurance and why should you get it?

Generally young people are often reluctant to buy insurance thinking that it is for old folks, those who are not healthy and for poor people. Contrary to such thoughts, no matter how rich you are, no matter how healthy you and no matter your age, we all need insurance.

Here, we are going to talk all about insurance meaning and highlight most common types of insurance and highlight its importance to the young generation.

Insurance is an arrangement by which a company undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. The concept of insurance is very simple to understand, an insurer get small periodic amounts of money (premiums) against a probability of a vast unanticipated loss or lump sum payment at policy maturity. What happens is that policyholders pool their risks together and any loss that they suffer will be paid from these premiums.

In Zimbabwe, the four most common types of Insurances that people buy are: Life Insurance, Health Insurance, Motor Insurance and home Insurance.

Life insurance

Life insurance policy is a contract between an individual and an insurance provider where the insurer gives financial protection to the policyholder in exchange for premiums. Financial protection is provided in the event of death of the lives assured or if the policy matures. There are different types of life insurance policies and therefore you will need to consult your insurer to explain what best suites your needs.

Health insurance

This is insurance coverage that pays for medical, surgical, prescription drug and dental expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury. This is also done in exchange of premiums paid.

Motor insurance

It is a must to have motor vehicle insurance. One must buy motor insurance before driving in a public place. It protects the driver, vehicle and other motorists against liability in case of accident. It also provides financial compensation to cover any injuries caused to people or their property.

Homeowners insurance

This is property insurance and it covers losses and damages to homes, furnishings and other assets. This insurance also offers liability coverage against accidents in the home or on the property.  A homeowner’s insurance policy typically covers four kinds of incidents on the insured property: interior damage, exterior damage, loss or damage of personal assets, and injury that occurs while on that property.

Benefits of Insurance

Protection against Insecurities

This is probably the most outstanding and essential advantage of having insurance. The insured is indemnified against losses. One needs therefore to buy the right type of insurance policy to get protection against losses emanating from various uncertainties. Health insurance protects one from unexpected, high medical costs. You pay less for covered in-network health care and you get medication at a time you want it after paying nothing or little money upfront.

Easy cash flow management

If the unexpected event happens and you do not have a policy, you will be forced to folk out significant amount of money at once and this will obviously negatively affect one’s cash flow. However, if insured, the insurer will pay this amount in the event of such events.

Financial Security

Life is unpredictable and is full of uncertainties. It is difficult and at times impossible to totally avoid or to reduce the possibility of an unfortunate event. Death for example is unavoidable. The best one can do is to prepare for it and the best way to do this is to take a life policy. Having a policy acts as a safety blanket during an eventuality. Insurer is obligated to pay the beneficiary as per stated in the policy document.

Long-Term Savings

Through life insurance one is able to make long term investments. Such insurance plans help you make systematic savings and after some time one will end up having a good lump sum payment which can be used for to buy stands, homes, starting or boosting business ventures or to pay lobola.

Another important factor to consider here is that some life insurance policies offer monthly pay-outs in the form of annuities, which is an ideal way to aim at and achieve retirement goals.

Collateral security

Some types of life insurance are beneficial in that they can be used as collateral security from financial institutions. You can be given loans guaranteed by your policy.

Tax exemptions 

You will need to consult your insurer about tax, but some policies are tax free which can be a plus for you if you are being heavily taxed.

As we celebrate this year’s global money week, please take some time to learn more on how you can change your life through insurance but please do not expect overnight results here. As noted above you can derive quite a number of benefits from insurance. This is not a thing for old folks or for those ill but it is for everyone. It is actually generally cheaper for the young ones to have an insurance and therefore I urge you to be insured whilst still young.

Farai Francis Zhara holds an MBA from the National University of Science and Technology and a BCom from Midlands State University. He is a certified client services practitioner with over a decade in the insurance sector. He writes in his personal capacity. [email protected]