Question
Is having an insurance plan really worth it, even if it sometimes seems like a scam?
Answer
The dynamics of insurance is often misconceived by a lot of people which is why it could seem unworthy or unappealing to people. However, understanding how insurance policies work would resolve any misconceptions you might have. Having an insurance plan is a way to protect yourself from unforeseen financial losses.
So, how do insurance plans work? Here is a simple way to understand what insurance stands for. An insurance is an agreement where an insurance body agrees to pay for unexpected financial losses that may occur in the future for a monthly premium payment by the insured. The insured is the individual who undertakes an insurance policy. Most individuals take out an insurance policy for their properties, healthcare and their life.
Now that you know about insurance, let’s focus on why you need it. Insurance helps with mitigating future risks you might face. For instance, when an unforeseen event occurs and your property gets damaged, having an insurance policy in place would prevent you from having to go back to square one so that you have something to fall back on.
Having an insurance policy can give you a feeling of security and peace of mind regarding unforeseen financial losses. The insurance body would help you cover the costs of unexpected accidents, medical bills or damage to properties such as your car, house, etc., as well as illnesses or liability claims. It could also protect your family financially in the event of your death. The coverage for unexpected risks or events you get from your insurance policy depends on the type of insurance you have such as health insurance, auto insurance, life insurance, etc.
To avoid insurance plans that could seem like a scam, it is very important that you do your research before picking an insurance body to help set up your insurance policy. You need to consider important factors such as:
- The level of your financial risk: This would determine the type and level of coverage you need.
- Costs versus benefits: It is also crucial to compare the cost of the insurance premium to the benefits the insurance policy you are considering would offer.
- Consider how comprehensive and suitable, the insurance coverage is, particularly in alignment with your long term goals
Finally, in the event that a loss against which you have an insurance policy occurs, the insurance body with which you undertook the policy would reimburse you or provide financial compensation in line with the terms of your policy. The amount paid out would depend on the coverage limit and conditions in the policy.
It’s best to discuss with a licensed insurance professional who can guide you as you begin your insurance journey.
Question
How can I invest in gold without physically buying it?
Answer
Investing in gold is a form of alternative investment. Gold is often considered as a safe haven asset. A safe haven asset retains its value or could even increase in value during periods of economic instability such as a high inflationary period.
Investing in gold is also a way to diversify your portfolio and spread risks across various investments.
There are various ways to invest in gold. You either purchase it physically from gold traders, often in jewelry form. You can also purchase gold bars or coins.
Another way to invest in gold is through exchange traded funds (ETFs) that are traded on the stock exchange. An ETF comprises bits and pieces of various assets such as stocks, bonds and other commodities. A gold ETF invests in either gold or companies involved in the extraction process.
You can also invest in gold by purchasing shares of companies that mine gold. In theory, as gold prices increase, the share price of these companies should also increase. However, it is important to note that the value of the stock is also dependent on the company’s performance and not only on the value of gold.
Question
Are the returns from investing in treasury bills taxable?
Answer
Treasury bills in Nigeria are now taxable. In 2012, the federal government of Nigeria had issued tax exemption orders on the returns earned on short-term securities such as treasury bills.
However, this order was only in effect for ten years and has now expired. A 10% withholding tax is now charged on the returns from treasury bills.
Our financial experts are readily available to guide your investment decisions. If you would like to sign up for a one-on-one session, please send an email to sales@themoneyafrica.com or send a DM to any of our social media platforms.
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