“Insurance is a scam.”
I’ve heard that sentence more times than I can count — at family gatherings, in group chats, on Twitter threads. And I get it. When you’re paying premiums month after month without ever filing a claim, it can feel like money disappearing into thin air.
In this article, I will be breaking down the biggest insurance myths in Nigeria and using actual industry data to show what’s fact, what’s fiction, and why these misconceptions about insurance cost Nigerians millions every year.
Myth 1: “Insurance companies never pay claims”
The myth
Many Nigerians believe insurance companies are quick to collect premiums but disappear the moment something goes wrong. It’s one of the most persistent misconceptions about insurance in Nigeria, and it’s costing people real financial protection.
The reality
The truth is, most insurance companies in Nigeria do pay claims and the data proves it.
According to the National Insurance Commission (NAICOM), Nigeria’s insurance industry paid out ₦622 billion in valid claims in the last quarter of 2024 alone. That’s 80% of all reported claims and a clear sign that insurers are not just collecting premiums as widely believed but they’re paying, and doing so consistently.
Here’s what the data shows:
- Total gross claims stood at ₦779.5 billion
- Life insurance settled about 84% of reported claims
- Non-life insurance handled 78.1% of claims
- Claims paid represented roughly half of all premiums generated in that period
Where this myth comes from
So why does the idea that “insurance companies don’t pay” still persist?
The small percentage of denied claims (about 10–20%) often have the loudest coverage.
In reality, most denials occur because of:
- Missing or incomplete documentation
- Claims filed after the policy had expired
- Exclusions or policy terms that weren’t fully understood
- Fraudulent or inconsistent submissions
When customers understand their policy terms and submit complete documentation, most insurance claims in Nigeria are processed without issues. The challenge isn’t refusal, it’s insurance literacy.
Myth 2: “Insurance is only for rich people”
The myth
If you’re not wealthy, you can’t afford insurance and don’t need it anyway.
The reality
Insurance is actually more critical for people without substantial savings. The wealthy can absorb financial shocks. Everyone else needs protection against unplanned costs.
Let’s take a look at some numbers:
Basic insurance costs:
- Health insurance plans start at ₦15,000–₦30,000 annually
- Third-party vehicle insurance (legally required): ₦15,000
Costs without insurance:
- Average hospital stay for malaria complications: ₦150,000–₦400,000
- Minor car accident repairs: ₦200,000–₦800,000
You can’t afford not to have basic coverage. One incident without insurance can wipe out years of savings.
Myth 3: “Young, healthy people don’t need health insurance”
The Myth
If you’re in your 20s or 30s, rarely get sick, and exercise regularly, health insurance is unnecessary.
The reality
Studies indicate a large proportion of hospital admissions are among younger adults (around two-thirds in some Lagos ICU and major hospital studies). Youth doesn’t guarantee immunity from accidents, sudden illnesses, or genetic conditions that emerge unexpectedly.
Common risks young Nigerians face and need to be insured for:
- Road traffic accidents (highest among the 25–40 age group)
- Appendicitis, kidney stones, gallbladder issues
- Pregnancy complications (even in healthy women)
- Sports injuries requiring surgery
- Undiagnosed conditions like diabetes and hypertension
Why getting insured early helps:
- Lower premiums
- Fewer exclusions for pre-existing conditions
- Builds a strong health record with your insurer
Being young is not a shield from risk. It’s actually the best time to get health insurance.
Myth 4: “The claims process is deliberately complicated”
The myth
Insurance companies intentionally make the claims process confusing and difficult to discourage you from claiming.
The reality
Most claim delays result from incomplete submissions, not deliberate obstruction. Insurance is a documentation-heavy industry because of fraud prevention and regulatory requirements.
What actually complicates claims
- Missing required documents (police reports, medical records, receipts)
- Filing outside the notification window (some policies require a 24–72-hour incident notification)
- Not understanding policy exclusions before filing
- Not following up on outstanding requirements
The modern reality that is helping:
Many Nigerian insurers now offer:
- Mobile app claim submission
- Digital document upload
- Real-time claim tracking
- 24–48 hour initial assessment
- Direct settlement with hospitals
When you understand your policy and submit complete documentation, most claims process smoothly. The issue is policy literacy, not intentional difficulty.
Myth 5: “Life insurance is betting against yourself”
The myth
Buying life insurance is morbid, pessimistic, and like betting that you’ll die.
The reality
Getting life insurance isn’t about expecting the worst, it’s about preparing thoughtfully for the people who count on you. It’s one of the simplest ways to create financial stability and peace of mind for your loved ones. It helps ensure that the goals and plans you’ve worked hard for don’t stop, even if you’re no longer there to see them through.
Consider these situations
- Single parent with children: Life insurance can help secure your children’s education and well-being.
- Primary breadwinner: It ensures your family can maintain their lifestyle while adjusting to change.
- Business partner: It provides funds to keep operations stable or buy out your share if needed.
- Outstanding loans or obligations: It protects your loved ones from financial strain
The mathematics
For a 35-year-old, a life insurance plan can cost much less than most expect, often less than what you might spend monthly on streaming subscriptions or dining out. When you think of it this way, life insurance isn’t a bet, it’s a quiet act of care. It’s how you make sure your loved ones have what they need, no matter what happens next.
Moving beyond myths
These myths didn’t appear out of nowhere. For most Nigerians, insurance wasn’t something we grew up learning about, not in school, not even at home. Many of our parents didn’t have access to affordable or transparent coverage, and the industry itself hasn’t always done the best job of explaining how it works.
But that’s starting to change. With the rise of digital insurance platforms in Nigeria and better access to affordable health insurance plans, more people are discovering that insurance isn’t a luxury, it’s a tool for stability, confidence, and smarter financial planning.
If you’re still unsure where to begin, our guide on how to choose the right HMO in Nigeria is a good place to start. You’ll find practical advice on comparing plans, understanding benefits, and avoiding the most common mistakes first-time buyers make.
The goal isn’t to convince you to buy insurance. It’s to give you the facts you need to make informed decisions for yourself and your family.
What you can do to get started
- Check your current coverage (if any): See how it measures up against what you’ve learned.
- Fill in the gaps: If you’ve believed any of these myths, now’s a good time to ask questions and get clarity.
- Talk to your insurer or advisor: A quick conversation can save you from costly misunderstandings later.
- Explore better options: Read about alternatives to common HMO providers to understand what’s available and how coverage differs.
- Share what you learn: Many of these misconceptions persist simply because people don’t have access to the right information.
If you have questions about your insurance coverage or where to start, feel free to reach out to us, we’re always happy to help.
Author: Aruma Ezinne
Leave a Reply