In response to recent media inquiries highlighting common misconceptions around savings elements within life insurance policies, Mr. Babajide Osopale, Head, Retail Life Technical at AIICO Insurance Plc, offers clarity on frequently misunderstood aspects – particularly around the early termination of long-term life insurance products.
In today’s dynamic world, more individuals are taking proactive steps to secure their future and that of their loved ones. One of the most effective tools for doing this is life insurance — a product designed not just to provide peace of mind, but real financial protection in times of need.
However, it is important that members of the public fully understand what life insurance is, and more importantly, what it is not. At AIICO Insurance Plc., we are committed to empowering Nigerians with the knowledge needed to make informed financial decisions, especially when it comes to insurance.
Life Insurance: It’s Not a Bank Account
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we continue to see is the idea that life insurance works like a savings account where deposits made can be withdrawn on demand, with accumulated interest.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.
Life insurance is fundamentally a risk protection product. 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 is the core difference between life insurance and conventional savings or investment products: it offers immediate coverage against life’s uncertainties, not guaranteed withdrawals or cash returns at any time.
Why Surrender Values May Be Lower
Most life insurance policies 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.
This is because the insurance company assumes full liability for the sum assured from day one, and a significant portion of early premiums goes toward covering this risk, administrative costs, and regulatory reserves. The surrender value is not a refund mechanism; rather, it is a calculated benefit based on how far the policy has run and the structure of the contract.
Here are my thought – We encourage 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 our life insurance products, 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.
Facing Financial Challenges? Don’t Surrender — Talk to Us
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.
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. These options can serve as vital support during financial emergencies, helping customers meet urgent needs while retaining the life insurance protection their policies provide.
AIICO’s customer service teams are readily available to guide policyholders on the options available under their policies. We encourage open communication to ensure customers receive the support they need while preserving the long-term value of their insurance coverage.
Read Before You Sign: Know What You’re Buying
Insurance contracts come with clearly stated terms and conditions, including details about premium payments, benefits, surrender value, maturity value, exclusions, and more. These are all outlined in the policy documents, brochures, and benefit illustrations provided at the start of the policy.
Members of the public are encouraged to read and understand all policy documents thoroughly before signing. 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.
At AIICO., we have implemented a structured onboarding process to ensure new customers fully understand our products before signing up. During this process, we provide clear and comprehensive information on policy terms, key product features, benefits, premium frequency, and policy duration. This proactive and transparent approach is designed to support informed decision-making and build lasting customer trust.
Why Trust Matters
AIICO Insurance Plc. has been in business for over six decades, serving individuals, families, and businesses across Nigeria. Our track record of trust, integrity, and consistent claims payment is the reason why many Nigerians continue to choose us as their preferred insurer.
We pay out billions of naira monthly in claims and benefits, standing by our customers when it matters most. Our commitment is not only to provide protection but also to ensure transparency and customer support every step of the way.
Whether you’re already insured or considering taking out a life policy, we encourage you to look beyond short-term needs and focus on the long-term protection life insurance offers. It’s one of the most responsible financial decisions you can make for yourself and your loved ones.
