Addressing the misconceptions around savings elements within life insurance policies, the head, Retail Life Technical at AIICO Insurance Plc, Babajide Osopale stated that, “a common misconception we continue to see is the idea that life insurance works like a savings account where deposits made can be withdrawn on demand, with accumulated interest. This is not the case.
Stating that life insurance is fundamentally a risk protection product, he said: “From the moment your first premium is paid, you are covered for the full sum assured under the policy. This means that in the unfortunate event of death during the policy term, named beneficiaries will receive the agreed payout regardless of how many premiums the policyholder may have paid up to that point.”
This criteria, he said, is the core difference between life insurance and conventional savings or investment products: as it offers immediate coverage against life’s uncertainties, not guaranteed withdrawals or cash returns at any time.
Most life insurance policies, he added, do offer a surrender value if the policyholder chooses to terminate the policy before its maturity date,however, this surrender value is typically a fraction of the total sum assured, or total premiums paid, particularly in the early years of the policy.
He encouraged policyholders to keep their life insurance policies active until maturity, so they can enjoy the full benefits—such as maturity payouts, bonuses (where applicable), and lasting peace of mind, ‘knowing that AIICO will step in if the unexpected happens brings comfort, as your loved ones will receive the financial protection you’ve prepared for them.’
In addition to its life insurance products, he said, “AIICO also offers investment-focused products for customers who may prefer options without risk protection but with the potential for competitive returns. These include flexible savings plans with lump-sum or periodic contribution options.
“Some of these investment plans come with features such as guaranteed payment periods, and interest accruals, offering customers a structured way to grow their funds while meeting long-term financial goals.”
Saying that, “we understand that life is unpredictable, and financial pressures can sometimes arise during the course of a policy. If you find yourself in such a situation, we urge you not to rush into terminating your policy,” he added, “At AIICO, provisions such as policy loans are available to eligible policyholders, allowing access to funds against the value of their policies without terminating coverage.”
Disclosing that, Insurance contracts come with clearly stated terms and conditions, including details about premium payments, benefits, surrender value, maturity value, exclusions, and more, he added that these are all outlined in the policy documents, brochures, and benefit illustrations provided at the start of the policy.
He urged members of the public to read and understand all policy documents thoroughly before signing, saying, “where any terms or conditions appear unclear or complex, it is advisable to seek clarification from the insurance provider to ensure a full understanding of what the policy covers — and what it does not.
