Introduction

Despite its growing importance, insurance in Nigeria remains one of the most misunderstood financial services. Many Nigerians still view insurance with skepticism or suspicion—largely due to misinformation, cultural beliefs, and past negative experiences.

These misconceptions don’t just limit awareness—they prevent individuals and businesses from protecting themselves against real financial risks. Whether it’s a car accident, hospital emergency, business loss, or even a fire outbreak, having the right insurance policy can be the difference between recovery and ruin.

In this post, we’ll expose the most common myths about insurance in Nigeria, explain why they’re false, and highlight the real benefits insurance offers to everyday Nigerians.

Myth 1: “Insurance is Only for the Rich”

Truth: Insurance is for Everyone—Regardless of Income

This is perhaps the most widespread myth. Many people believe that insurance is only for high-income earners, CEOs, or big businesses. In reality, there are affordable policies designed for all income levels.

 For example:

• Microinsurance policies start as low as ₦500/month and cover illness, accident, or theft.

• Third-party motor insurance, which is mandatory by law, is budget-friendly and provides essential protection.

• Health Maintenance Organizations (HMOs) now offer low-cost health plans for market traders, artisans, and self-employed workers.

Conclusion: Whether you’re a teacher, okada rider, hairdresser, or trader, there’s a policy that fits your budget and needs.

Myth 2: “Insurance Companies Don’t Pay Claims”

Truth: Licensed Insurers Pay Legitimate Claims

This myth stems from experiences with fake insurance agents or companies that operate outside the law. Many Nigerians believe that insurers collect premiums but disappear when it’s time to pay claims.

The truth is: legitimate, NAICOM-licensed insurance companies do pay claims, but they follow due process.

 Claim denial often happens due to:

• Submitting incomplete or false documentation

• Lack of understanding of what the policy covers

• Expired or unpaid policies

• Dealing with unregistered or fake companies

 To ensure your claim is paid, always:

• Buy from licensed companies (verify at www.naicom.gov.ng)

• Read and understand your policy documents

• Ask questions before signing

Myth 3: “Insurance is a Waste of Money”

Truth: Insurance Helps You Save Money in the Long Run

Nigerians often say: “God will protect me, I don’t need insurance”. But while faith is vital, planning is also biblical and practical.

Paying ₦10,000 annually for insurance might feel like a waste—until your car is involved in an accident that costs ₦500,000 to repair. Or a fire guts your shop and you lose everything.

Insurance helps you:

• Avoid huge unexpected expenses

• Maintain financial stability during emergencies

• Protect your family or dependents if something happens to you

Insurance is not an expense—it’s protection.

Myth 4: “Insurance is Too Complicated to Understand”

Truth: Basic Insurance is Easy to Understand

Yes, insurance documents can contain complex legal terms. But the core concept is simple: You pay a small amount now to protect yourself from big losses in the future.

Also, many insurance providers now:

• Offer simplified plans for individuals and small businesses

• Provide customer education through videos, brochures, and customer care

• Use local languages to explain terms

Plus, you can always consult a licensed insurance agent to help you understand the policy.

Myth 5: “Only Big Companies Need Insurance”

Truth: Even Small Businesses Need Insurance

Many small business owners believe that insurance is only for large corporations. But that’s not true.

If you run:

• A barber shop

• A fashion business

• A keke or taxi service

• A market stall

… you still face risks like:

• Fire

• Theft

• Illness

• Damage to goods or premises

There are SME-targeted insurance plans that offer protection at an affordable rate. In fact, NAICOM and some insurers are promoting inclusive insurance to protect microenterprises.

 You don’t need a CAC certificate to get insured. Even informal businesses qualify.

Myth 6: “Insurance is Haram or Un-African”

Truth: Insurance is Compatible with Faith and Culture

Some people believe insurance goes against religious or traditional beliefs—especially in rural areas.

However, modern Islamic-compliant insurance products (Takaful) have been introduced in Nigeria. These policies follow Islamic financial principles, and profits are shared with participants.

Also, traditional beliefs about relying solely on communal help or fate don’t reflect today’s realities. Communities can no longer bear the cost of personal disasters. Insurance provides structured, predictable protection.

Myth 7: “You Can Only Buy Insurance Through Brokers”

Truth: You Can Buy Directly from Insurance Companies

While brokers are helpful, you’re not limited to them. Today, many insurance companies offer direct purchase channels:

• Company websites

• Mobile apps

• USSD short codes

• Bank partnerships

• HMOs and fintech platforms

You can compare options and buy in minutes. Just ensure you’re dealing with registered companies.

Myth 8: “Life Insurance Is for Old People”

Truth: The Younger You Are, the Cheaper It Is

Life insurance is often misunderstood as something you only need in old age. But in reality, starting early is more beneficial.

Reasons to buy life insurance when you’re young:

• Premiums are cheaper

• You can build long-term wealth

• It protects your children, spouse, or dependents

• Many policies come with investment components

👉 Even if you’re under 30 and unmarried, a term life insurance policy can secure your future and provide peace of mind.

Myth 9: “You Don’t Need Insurance if You’re Healthy or Careful”

Truth: Accidents and Illnesses Happen Without Warning

Many believe that since they hardly fall sick, or drive carefully, they don’t need insurance. But emergencies don’t give warnings.

• A reckless driver can hit your car

• A storm can damage your home

• You may need emergency surgery

• Your shop may be robbed

Insurance isn’t about predicting disaster—it’s about preparing for it.

Myth 10: “Claims Take Forever in Nigeria”

Truth: Claims Are Faster with the Right Documents

While there have been delays in the past, many insurers now process claims within days—especially when documentation is complete.

Modern improvements include:

• Digital claim submissions

• Customer service portals

• Regulatory oversight by NAICOM

Some providers even offer instant payout for microinsurance claims. The key is to:

• Know your policy terms

• File claims properly

• Cooperate during verification

Conclusion

Misinformation and myths have prevented many Nigerians from accessing the benefits of insurance. But with the expansion of microinsurance, digital platforms, and regulatory reforms, it’s now easier than ever to get insured, stay protected, and enjoy peace of mind.

Don’t let outdated beliefs or fear hold you back. Insurance is not a luxury—it’s a financial safety net for you, your family, and your business.

 Summary: Myths vs Reality

 Final Word

Still unsure about what insurance plan is right for you? Visit the NAICOM website or contact a licensed insurance provider today.