We all agree that someday, we shall pass away! Death is, therefore, inevitable. There is also another certainty that we do not have the luxury of being informed when any of us reached this final point. Thus, the best part of life is lived when we live each day like it is the last day. Today is the best day to bequeath or endow. Children come with a great deal of exaction on finances on couples’ earnings. Insurance savings through savings endowment policies have proven to be the most affordable means of saving up for children’s tuition, books and other essentials when they grow into school age.
For instance, when a child is born today, an educational endowment could be taken in the named child after the year’s birthday. Based on the earnings capacity of the parents and the category of education desired by parents for the child, a 10-year plan targeting the final years of college and all through university could be purchased. It may also excite some parents to buy insurance for the formative years of the child and pay from primary school and through other levels of education.
Notwithstanding the economic difficulties, endowments can serve other purposes – which essentially solves the problems the policyholder intended despite his absence due to death. Often the major challenge that prevents many people from embracing endowments is the tie to death benefits whereas most forget a significant proportion of those who buy endowments cash out while still alive and enjoy the benefits with the named beneficiaries.
Rebecca Lake writing in Forbes Advisor states, “Endowment life insurance is designed to offer a payout to the policy’s beneficiaries when the insured person passes away or to the insured person at the end of a set period. An endowment life insurance policy can act as a savings and investment vehicle.”
Right fit for individual needs
The Nigerian economic environment is peculiar as well as daunting. Education takes a large slice of the typical family income. Both children and parents are constantly demanding a portion of their earnings for education. For parents, it is a continuous quest for knowledge, self-improvement and career enhancement. Therefore, parents can start an endowment for their children after their first anniversary. However, depending on an individual’s financial situation and needs, term life insurance or a permanent policy might be more appropriate.
The act of gifting itself is an expression of the love we share with others, particularly our family. It is also a demonstration of the care and responsibility we owe to the ones concerned. Insurance simply serves as the best tool to do this. Ideally, this kind of planning frees funds when you want to invest in self-improvement in future because children’s education, family health and a few others have been taken care of.
Without exception, all Nigerians are confronted with, at least, one material challenge or the other that requires fixing. But the cycle of everyday living has rendered many people incapable of seeking alternatives to solving these problems except to plunge headlong into the vicious cycle. As schools reopen, the rat race for school fees begins again for most families with the additional burden of the high cost of living. To ask any parent at this time to take out education policy for children will be a tough call. Yet this remains the only viable planning tool in a despondent economy.
Endowments allow the policyholder to cash out at maturity. This type of life insurance functions on multiple benefit levels – funding death benefits, cash out at maturity to the insured, payout to named beneficiaries, and accumulating savings. Depending on the age of the policyholder at inception, the premiums tend to be higher for shorter terms (like 5 years) and less if the term is more prolonged (like 20 years or more).
Due to low returns on investment and unstable macroeconomic variables, it may be advisable to take five years of saving plans at a time and roll over for another term if desired. Yesterday belongs to the past, today remains the best day to start. If your child is 5 years, you will be in the position to congratulate yourself if you start putting together an educational endowment together so that in the next 10 years, funding university education will be less challenging for this particular child.
Aside from endowments which may be accessed by the policyholder at maturity or the end of the savings period, bequeathals can be tied to organisations where one wishes to save up money and donate large sums either for charity, a cause or r the family after the policyholder passes away. Many people feel obliged to their communities, religious groups, family groups or indeed to individuals and families. These affiliations to a cause or love for a society where one belongs may form the basis of leaving a legacy. In the long term, this type of insurance helps the policyholder accumulate enough funds to execute his wishes.
The Right Time
Oftentimes, we do hope that our plans kick start at the right time. Despite the parlous state of the economy and most individuals’ finances, the right time is now. Begin with the family unit – think of education, family life after the breadwinner is gone. Think of the sustainability of children’s education, of their access to good health and other necessities when the provider is no longer there. Now is the right time!