I started a series on how to benefit from the 4 parties in the insurance market. The first party I discussed was “The Insurer” please refer to the link. HOW TO BENEFIT FROM THE 4 PARTIES IN THE INSURANCE MARKET. PART ONE.
Today I want us to understand who an insured is and the benefits for the insured in the insurance market.
WHO IS AN INSURED?
An insured is an individual or an organization who takes up insurance protection from the insurer.
In simple terms, the insured is a customer that patronizes insurance companies to buy an insurance policy.
BENEFITS OF INSURANCE TO THE INSURED
The following are the benefits an insured enjoys from insurance.
- Financial protection
- Peace of mind
Insurance is financial protection against an insurable risk. Anyone or organization who buys insurance does that to secure financial protection against a financial interest in the subject matter of insurance. Please refer to the link on insurable interest. 6 FUNDAMENTAL PRINCIPLES OF INSURANCE YOU NEED TO KNOW
FINANCIAL PROTECTION FOR AN INDIVIDUAL
Let’s consider the case of Frances Peter to see how insurance has helped him protect his finances.
Frances Peter is a Bailee who is in the custody of other people’s properties on a temporary basis. As a Bailee, he has an insurable interest in the properties that are in his custody. He is being referred to as a Bailee because he is a mechanic and his customers do leave their cars in his mechanic workshop for a period of time before their cars are being repaired and delivered back to the customers.
There was a fire incident overnight in Frances Peter’s workshop who raised down two of his clients’ vehicles.
Frances didn’t need to replace his customers’ vehicles with his own money, he only needed to incident the loss with his insurer who replaced the vehicles and got them delivered to his customers.
However, if Frances had failed to effect an insurance cover on the vehicles in his custody and such unfortunate incident occurred, it would have caused him a fortune to replace his customers’ cars and may likely go bankrupt. But putting insurance in place is financial protection for Frances peter.
FINANCIAL PROTECTION FOR AN ORGANIZATION
Let us consider the case of a production company on how insurance serves as financial protection for the organization.
XYT is a food production company. The company has adequate insurance protection.
One of the customers instituted an action against XYT Company to claim damages that on the consumption of XYT foods, he developed a stomach ache. This company would not need to pay for damages from the company’s account, the product liability insurance will respond to such liabilities.
Another benefit an insured enjoys from insurance is financial security. Segun Talomola was an employee of XYT Company. The company effected a group life assurance cover for her employees. The unfortunate event occurred as Segun Talomola had an accident that claimed his life on one of his official trips.
Segun Talomola was the breadwinner in his family, whose death would create a financial hardship to the family.
On the other hand, XYT as an organization, Segun’s death will demand a statutory corporate responsibility from the company to pay the family of the deceased at least his 3years annual emolument(i.e. the basic salary, housing and transportation allowance)
XYT Company will only need to call on her insurer to respond to their financial obligation to Segun Talomola’s family.
While Segun was alive, he would have been fully aware that his company secured a group life insurance for him as an employee of the company, this would have been a morale boost for Segun on his job.
When group life assurance is in place in an organization, it serves as financial security for both an employee as an individual and also an organization as a corporate entity.
Stanly Okafor is a businessman whose warehouse was raised down by the fire. Ordinarily, this inferno would have sent Stanly Okafor into extinction as a businessman.
Stanly was back on his feet as a businessman because his warehouse was adequately insured against fire and pecuniary insurance.
Many business owners’ lives had been cut short, whenever an unfortunate incident occurs such as fire which rained down the business they have labored for in their entire life. The thought of “where do I start from” is what usually sends them to their untimely grave.
Putting insurance in place to restore your business after a loss is not only a business intelligence strategy that reinstates your business, but also a secret to longevity to enjoy the fruit of your labor.
PEACE OF MIND
“A business without a risk management strategy is a business with a risky management strategy”
A risk management strategy is not complete without insurance protection of organizational assets, both human and material which would save an organization a reasonable amount of money to fix the damage, should a loss occur. This gives peace of mind to the top-level managers that there would be business continuity should an eventuality occurs.
Also, as an individual, any person, who puts life insurance in place for his or her family has this peace of mind that whether he is alive or not, his financial obligation over his family will be uninterrupted.
I want to appreciate your patience to have read this article up to this moment, I hope you now have a better understanding of why you need insurance as an individual or as an organization.
If you have enjoyed this article and you have decided to put insurance protection for yourself or your organization. Kindly reach out to professionals at Bimbol Consultancy Services. We will be there to offer you our valued services.