UPDATES ON AUTO INSURANCE

·        COMPREHENSIVE COVER

This provides the maximum coverage possible.  It could be likened to the All Risks cover in respect of household or industrial properties.  It is however subject to a number of exclusions which tends to make the “Comprehensive” title a misnomer.It, amongst others, affords indemnity in respect of theft, damage to own vehicle, third party liability for both bodily injury and property damage.

·       THIRD PARTY ONLY

This provides a restricted cover in the sense that damage to own vehicle is excluded.  Only third party liability is covered.

·       THIRD PARTY FIRE & THEFT

This provides in addition to third party liabilities, cover against fire and theft loss to own vehicle.  Accidental damage to own vehicle is however excluded.

INTEREST

The interest to be protected under this class of insurance could be classified as follows:-

Ø PRIVATE CARS

All private passenger cars including four wheel drive vehicles whether owned, leased, used in connection with the company operation or by officials of the company. Policy also covers third party property damage.

Ø COMMERCIAL VEHICLES (GOODS ONLY)

All goods carrying vehicles including Pick-up van(s) whether owned/leased, used in connection with the company’s operations.                       

Ø COMMERCIAL VEHICLE (OMNI – BUS)

            All passenger-carrying vehicles other than private cars.

Ø COMMERCIAL VEHICLE (SPECIAL TYPE)

            Mobile cranes, Fork lifts, Refuellers, Hydrant servicers and the likes.                            

Ø MOTORCYCLE

MOTOR VEHICLE INSURANCE, also called automotive insurance ,  a contract by which the insurer assumes the risk of any loss the owner or operator of a car may incur through damage to property or persons as the result of an accident. There are many specific forms of motor vehicle insurance, varying not only in the kinds of risk that they cover but also in the legal principles underlying them.

Liability insurance pays for damage to someone else’s property or for injury to other persons resulting from an accident for which the insured is judged legally liable; collision insurance pays for damage to the insured car if it collides with another vehicle or object; comprehensive insurance pays for damage to the insured car resulting from fire or theft or many other causes; medical-payment insurance covers medical treatment for the policyholder and his passengers.

According to the Insurance Information Institute, in the United States in the early 21st century, about two-thirds of the money spent on premiums for private passenger auto insurance went to claims. More than half of this amount covered car damage. The rest covered personal injuries. The remaining third of the money spent on premiums covered insurance companies’ expenses—such as commissions, dividends to policyholders, and company operations—and contributed to their profits.

In many countries, other approaches to automobile accident insurance have been tried. These include compulsory liability insurance on a no-fault basis and loss insurance (accident and property insurance) carried by the driver or owner on behalf of any potential victim, who would recover without regard to fault.

ADVANCE TIPS ON LIFE INSURANCE

Life insurance (also referred to as life assurance) is a contract between an insured (insurance policy holder) and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment.

Definite exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events.

PLAN OF A LIFE INSURANCE

There is a difference between the insured and the policy owner, although the owner and the insured are often the same person. For example, if Sam buys a policy on his own life, he is both the owner and the insured. But if Dan, his wife, buys a policy on Sam's life, she is the owner and he is the insured. Most companies allow the payer and owner to be different, e. g. a grandparent paying premiums for a policy on a child, owned by a grandchild. The policy owner is the guarantor and he will be the person to pay for the policy. The insured is a participant in the contract, but not necessarily a party to it.

The recipient receives policy proceeds upon the insured person's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy.. If a policy has an irrevocable beneficiary, any beneficiary changes, policy assignments, or cash value borrowing would require the agreement of the original recipient. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation

In instances where the policy owner is not the insured (also referred to as the celui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an insurable interest in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The insurable interest requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great.

Special exclusions may apply, such as suicide clauses, whereby the policy becomes null and void if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory one-year suicide clause). Any misrepresentations by the insured on the application may also be grounds for nullification.

The face amount of the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (like a hundred years old).

COSTS, INSURABILITY AND UNDERWRITING

The insurer which is the life insurance company calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science, which is based on mathematics (primarily probability and statistics). It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation. Mortality tables are statistically based tables showing expected annual mortality rates.

The mortality tables provide a baseline for the cost of insurance, but in practice these mortality tables are used in conjunction with the health and family history of the individual applying for a policy to determine premiums and insurability. Mortality tables currently in use by life insurance companies in the United States are individually modified by each company using pooled industry experience studies as a starting point. In the 1980s and 1990s, the SOA 1975–80 Basic Select & Ultimate tables were the typical reference points, while the 2001 VBT and 2001 CSO tables were published more recently. The newer tables include separate mortality tables for smokers and non-smokers, and the CSO tables include separate tables for preferred classes.

Current US mortality tables predict that roughly 0.35 in 1,000 non-smoking males aged 25 will die during the first year of coverage after underwriting. Mortality approximately doubles for every extra ten years of age, so the mortality rate in the first year for underwritten non-smoking men is about 2.5 in 1,000 people at age 65. Compare this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (regardless to health or smoking status).

The insurance company will investigate the health of an applicant for a policy to assess the likelihood of incurring a claim, in the same way that a bank would investigate an applicant for a loan to assess the likelihood of a default. Group Insurance policies are an exception to this. This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked, with certain responses or revelations possibly meriting further investigation. Life insurance companies in the United States support the Medical Information Bureau (MIB), which is a clearing house of information on persons who have applied for life insurance with participating companies in the last seven years. As part of the application, the insurer often requires the applicant's permission to obtain information from their physicians. Most of the revenue received by insurance companies consists of premiums paid by policy holders, with some additional money being made through the investment of some of the cash raised from premiums. Rates charged for life insurance increase with the insurer's age because, statistically, people are more likely to die as they get older.

Underwriters will determine the purpose of insurance; the most common being to protect the owner's family or financial interests in the event of the insured's death. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose.

Life insurance companies are never legally required to underwrite or to provide coverage to anyone, with the exception of Civil Rights Act compliance requirements. Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable. The policy can be declined or rated (increasing the premium amount to compensate for a greater probability of a claim).[citation needed]

Many companies separate applicants into four general categories. These categories are preferred best, preferred, standard, and tobacco.[citation needed] Preferred best is reserved only for the healthiest individuals in the general population. This may mean, that the proposed insured has no adverse medical history, is not under medication for any condition, and his family (immediate and extended) have no history of early-onset cancer, diabetes, or other conditions. Preferred means that the proposed insured is currently under medication for a medical condition and have a family history of particular illnesses. Most people are in the standard category Profession, travel history, and lifestyle factor into whether the proposed insured will be granted a policy, and which category the insured falls. For example, a person who would otherwise be classified as preferred best may be denied a policy if he or she travels to a high risk country. Underwriting practices can vary from insurer to insurer, encouraging competition.

DEATH PROCEEDS

Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. The normal minimum proof required is a death certificate, and the insurer's claim form completed, signed (and typically notarized).[citation needed] If the insured's death is suspicious and the policy amount is large, the insurer may investigate the circumstances surrounding the death before deciding whether it has an obligation to pay the claim.

Payment from the policy may be as a lump sum or as an annuity, which is paid in regular installments for either a specified period or for the beneficiary's lifetime.

INSURANCE VS ASSURANCE

The specific uses of the terms "insurance" and "assurance" are sometimes confused. In general, in jurisdictions where both terms are used, "insurance" refers to providing coverage for an event that might happen (fire, theft, flood, etc.), while "assurance" is the provision of coverage for an event that is certain to happen. In the United States both forms of coverage are called "insurance" for reasons of simplicity in companies selling both products. By some definitions, "insurance" is any coverage that determines benefits based on actual losses whereas "assurance" is coverage with predetermined benefits irrespective of the losses incurred.

TYPES

Life insurance may be divided into two basic classes: temporary and permanent; or the following subclasses: term, universal, whole life and endowment life insurance.

TERM INSURANCE

Term assurance provides life insurance coverage for a specified term. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

There are three key factors to be considered in term insurance:

    Face amount (protection or death benefit),

    Premium to be paid (cost to the insured), and

    Length of coverage (term).

Annual renewable term is a one-year policy, but the insurance company guarantees it will issue a policy of an equal or lesser amount regardless of the insurability of the applicant, and with a premium set for the applicant's age at that time.

Another common type of term insurance is mortgage life insurance, which usually involves a level-premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owner's property, such that any outstanding amount on the applicant's mortgage will be paid should the applicant die.

PERMANENT LIFE INSURANCE

Permanent life insurance is life insurance that remains active until the policy matures, unless the owner fails to pay the premium when due. The policy cannot be cancelled by the insurer for any reason except fraudulent application, and any such cancellation must occur within a period of time (usually two years) defined by law. A permanent insurance policy accumulates a cash value, reducing the risk to which the insurance company is exposed, and thus the insurance expense over time. This means that a policy with a million dollar face value can be relatively expensive to a 70-year-old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.

GUIDELINES FOR LIFE INSURANCE POLICY

GUIDELINES FOR LIFE INSURANCE POLICY FOR EMPLOYEES

1. O INTRODUCTION

1.1 Section 9 (3) of the Pension Reform Act 2004 (The Act) requires every employer, to which the Act applies, to maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee.

1.2 For the purpose of establishing uniform set of rules, guidelines and standards in relation to the application of the provisions of Section 9 (3), the following minimum guidelines shall apply.

2.0 GENERAL REQUIREMENTS

2.1 The employer shall fully bear all costs in relation to procurement of this policy, and this shall be in addition to, and separate from, the contributions to be made by the employer to each employee’s Retirement Savings Account, as required by the Act.

2.2 The Life Insurance Policy shall be effected through the purchase of a Life Policy issued by a Nigerian Registered Insurance Company, licensed and authorized to conduct Life Insurance Business by National Insurance Commission (NAICOM) under the Insurance Act 2003.

2.3 For ease of administration, a Consortium of eligible insurance Companies, as determined in paragraphs 3.1 and 3.2 of this guideline, shall be constituted for the purpose of providing life insurance cover for employees of the Federal Government.

2.4 Employers in the private sector shall be at liberty to engage the service of any insurance company or group of insurance companies which satisfies the eligibility criteria in paragraphs 3.1 and 3.2 of these guidelines.

2.4 Employers shall not be allowed to self insure.

2.5 As stipulated in Section 6 (1) of the Pension Reform Act, the National Pension Commission (The Commission) shall set up a Board of Inquiry for treating any case of missing employees referred to it by employers, for insurance claim purposes.

3.0 ELIGIBLE INSURANCE COMPANIES

3.1 In the first year of implementation, which is 2006, the National Pension Commission shall provide a list of NAICOM licensed and registered insurance companies eligible to conduct the business of provision of life insurance cover, under the provisions of the Pension Reform Act 2004.

3.2 For subsequent years, such eligible insurance companies must have met minimum acceptable standards to be fixed by the National Pension Commission.

3.3 The Commission shall collaborate with NAICOM to facilitate the Consortium referred to in paragraph

2.3 of these guidelines from amongst the list of eligible insurance companies in 3.1 and 3.2 above.

4.0 POLICY COVERAGE

4.1 The policy shall provide cover to the insured against Death.

4.2 Insurance coverage shall be for twelve (12) months, from January through December, and shall be renewable at the end of each coverage year.

4.3 The premium payable on the policy shall be pro-rated as applicable where an employee joins the scheme in the course of the year.

4.4 Where an employee leaves the service of the employer before the expiration of twelve (12) months, the premium paid relating to the unexpired period, shall be returned/set aside to the credit of the employer.

4.5 Insurance cover is mandatory for all employees as long as they are in employment.

4.6 Insurers shall be expected to ensure that employers comply with the minimum insurance cover of three times the annual total emolument of each employee.

4.7 Notwithstanding the provisions of 4.6 above, employers that have better existing life insurance policies for their employees, in terms of benefits, shall maintain such policies.

5.0 DOCUMENTATION REQUIREMENTS

5.1 Each employer shall obtain an insurance certificate from the insurer.

5.2 Such certificate shall be accompanied by a schedule which shall indicate amongst other things, the period of coverage, the number and details of staff at inception/ renewal date, their total emoluments, the benefit payable and the annual premium/date of full payment.

5.3 The insurance certificate shall be issued to employers by the Insurer within a month from the policy inception/renewal date.

5.4 Employers shall display a copy of the insurance certificate in a conspicuous place within the premises, for the information of the employees, as evidence of having taken such policies.

5.5 Employers shall send a copy of the insurance certificate with the schedule of benefits to the National Pension Commission and the Pension Fund Administrators (PFAs where the employees maintain their Retirement Savings Accounts (RSAs), not later than 31st March every year.

5.6 Employers shall be required to commence renewal negotiations in writing, within two (2) months to the expiration of the current insurance coverage. Such negotiation must be concluded before the last day of the current cover.

5.7 Full payment of the insurance premium shall be made, at the latest, on the first day of insurance cover.

5.8 Where an employer fails to effect full payment of premium at the stipulated time, the insurer shall report such failure to the National Pension Commission within fourteen (14) days of non receipt of premium.

6.0 OPERATIONAL TERMS

6.1 Operational terms of the policy shall address, amongst other issues the terms listed in paragraphs 6.2 to 6.6 below.

6.2 Free cover limit must be established between the insurer and employers. This is the limit of sum assured above which the insurer will require the affected individuals to undergo medical examinations.

6.3 Until satisfactory medical results are received, cover will be restricted to the free cover limit.

6.4 All employees shall be made to fill a non-medical form with their passport photograph attached, to ascertain identities and existence at commencement or point of entry into the scheme.

6.5 Procedure for filing and settlement of claims on the policy shall be clearly defined.

6.6 Employers are expected to negotiate premium rates payable on such life policies with the insurer, within the rate table stipulated by NAICOM.

7.0 DEATH OF AN EMPLOYEE

7.1 Where an employee dies, the employer shall immediately commence death benefit claim on behalf of the deceased, as prescribed in the operational terms of the policy.

7.2 Employer shall notify employee’s PFA and the National Pension Commission, of the employee’s death stating the claim amount receivable.

7.3 Employee’s PFA shall validate claim amount and where discrepancies arise, this must be resolved with the employer.

8.0 MISSING EMPLOYEE

8.1 Where an employee is missing, the employer shall report this immediately to the employee’s PFA, Insurer and the National Pension Commission.

8.2 The Board of Inquiry established by the National Pension Commission shall stipulate the documentary evidence required from employers to process missing person claims. This shall include the Police Report, Employee’s passport photograph, newspaper publication of the missing employee, a letter from employer declaring him/her missing and any other document as may be required from time to time.

8.3 The documentary evidence required by the Board of Inquiry set up by the National Pension Commission shall be provided within fourteen (14) working days after the period of one year, from the day the employee was declared missing.

8.4 The Board of Inquiry shall, within thirty (30) working days of receipt of complete evidence required for its deliberations, communicate its findings to the employer, insurer and the National Pension Commission, for appropriate action to be taken.

9.0 SETTLEMENT OF CLAIMS

9.1 Claims must be settled by the Insurer within seven (7) working days of receipt of complete documentation and acceptance of liability.

9.2 Information on any discrepancies on claims or its non-settlement within the time, as specified in 9.1 above, shall be sent to the National Pension Commission by the employer and employee’s PFA immediately.

9.3 Total sums due to the employee shall not be encumbered or subject to any deductions by the employer.

9.4 The total sum due to the deceased shall be paid directly to the credit of the deceased’s Retirement Savings Account by the insurer.

10.0 REVIEW

10.1 These guidelines are subject to regular reviews.

11.0 ENQUIRIES

All enquiries regarding these guidelines shall be directed to the National Pension Commission.