In Ghana, insurance is typically not considered a necessity; however, for people who take insurance policies their sum insured (maximum amount paid out for claims) is largely based on their current circumstances. Sadly, after people take policies they fail to increase their sum insured as their circumstances change.
Head of Retail Banking at First National Bank, Mrs. Akweley Laryea, recommends that as your financial circumstances change, it is essential to review the sum insured as it may no longer be sufficient to cover the needs of your family or dependants.
She highlighted common situations that should encourage people to update the amount of cover they are insured for.
- Marriage – Getting married and starting a family is a commitment that comes with a number of financial responsibilities. It is therefore essential to update your policy cover to include your partner as an insured life or the beneficiary of your policy.
- Children – One of the common reasons why people take out life insurance is to protect the financial future of their children. When you have a new child or the number of your dependants increase, it is important to ensure that your life insurance is adjusted to accommodate the changes. “An educational policy can be taken in addition to a life cover; for example, to cater to the needs of your dependants in the unfortunate event of your demise,” says Akweley.
- Getting a higher-paying job – If your financial situation improves, you should update your insurance cover accordingly to ensure that your dependants maintain the same lifestyle should you pass away. “For example, you could have moved into an affluent suburb and decided to take your kids to a high-end school,” she added.
- Buying a new house – Whether your home is purchased through a home loan or self-financed, it is essential to have adequate insurance policies in place to secure it. “You will need a property insurance policy to protect the building from damage as a result of fire, flood and allied perils. The contents of your home can also be protected from damages caused by these perils and from theft, burglaries and robberies. For homes purchased with a home loan, a mortgage protection policy can be taken out to cover the outstanding loan balance,” Akweley iterated. In the event of your demise or disability, you can rest assured knowing that your family will not be burdened with paying for the home loan.
- Health – As health costs increase, you may need to consider taking out a private health insurance policy to cover yourself and your family. A medical emergency is one of the top reasons why people are unable to achieve their savings and investment goals, because such emergencies are usually unexpected and require large sums.
Akweley explained that a health insurance policy will take care of the majority, if not all, of your emergency expenses – allowing you the room to achieve your savings and investment goals. If your health condition changes, you may have to consider taking a funeral policy or updating your cover amount based on your age and individual circumstances. Furthermore, depending on the nature and severity of the illness, you may be able to claim some compensation from your insurer.
“If you are unsure of the amount of life cover you need or whether it’s the right time to update your policy, it is advisable to speak to your bank or financial services provider for guidance,” concludes Akweley.