Taking life insurance in Kenya? Here’s a manual for your reference

Don’t just sign away your policy. Review it and ask questions.

Don’t just sign away your policy. Review it and ask questions.

What you need to know:

  • Don’t shop for the best price, shop for the best value product.
  • Work with an experienced agent who can get you a product that will meet your needs, within your budget.
  • Make use of online insurance policy calculators to gauge how much you need to insure based on your current financial position and earnings.

Life insurance is designed to reassure you that your dependents will be financially looked after in the event of your death. In Kenya, many life insurance companies have products designed to enhance a policyholder’s savings and investment plans. Over 90 percent of individual life insurance comprises the savings and investment model with partial maturity at periodic intervals during the term.

When buying this type of policy, you need to know the right type, when you need it, and how to buy it.

The dos

Why do you need to take life insurance? Answering this question will save you time, money, and help you pick the right product. According to Rhina Namsia, the chief executive officer of The Acemt Consulting, a financial planning and investment advisory firm, when you clearly understand your need for life insurance, picking the correct insurance term, type and coverage amount you need will be easier. The policy will not be a burden to you. “For example, Peter wants to buy life insurance to protect his daughter in the event that something happens to him. He will need to have coverage for 20 years with a higher face amount. On the other hand, Steve has a vehicle loan out and wants to make sure that the car will be paid off if he dies prematurely. In this case, Steve will need a 5 or 10-year term policy with a lower face amount. Steve and Peter have different life insurance needs and therefore need different insurance products,” says Namsia.

How much coverage do you need? Namsia says people looking to take up life insurance simply say, ‘I want Sh. 1,000,000, Sh. 2,000,000 or Sh. 5,000,000 in coverage.’ “These might sound like good figures to throw at your insurer. But they may not always match your actual needs,” says Namsia. Make use of online insurance policy calculators to gauge how much you need to insure based on your current financial position and earnings. At the same time, get yourself a reputable agent who will explain the little details, and pros and cons. “A good agent will take time to go over your needs and ensure your coverage is adequate so that you don’t get overinsured or underinsured,” says Namsia.

The rates: Will be based on your individual needs. This is why you must be realistic and reasonable with your expectations. “If you are not an athlete in perfect health, some of the advertised rates on TV may not be what you can qualify for,” says Namsia. Be completely honest and upfront about your health and lifestyle when discussing and negotiating with your insurer.

The agent and the insurer: Work with an experienced agent who can get you a product that will meet your needs, within your budget. In addition, make sure you review the life insurance company you are about to insure with. “Make sure that the company has been in business for a while and will remain in business for a long time, has a solid financial history, and is listed for accountability,” Namsia says.

The don’ts

i). Don’t shop for the best price, shop for the best value product. You need to look at the features of the product to determine its value. “For example, there are countless life insurance companies offering term insurance. By running a quick quote on yourself, you will find different prices,” says Namsia. “This is because some companies offer more benefits built into their products. There are features such as living benefits, terminal illness, and riders.” It all comes down to what is important to you.

ii). Don’t make the buying process of life insurance a ‘once and done’ activity. Life is not constant. If there are changes, ensure they are reflected in your life insurance policy. These changes could be as simple as updating your address on file or more complex as switching from the life product you took to a fresh product. “Typically, it is good to reexamine your insurance package at the minimum, once every 1 to 2 years. Make sure that the contact information is correct, the beneficiaries and the coverage amount is adequate,” Namsia recommends. “Let your agent know if something has changed in your life. Don’t assume that your insurance will be sympathetic about the changes in your life upon the policy maturity just because you already have life insurance,” she says.

iii). Don’t just sign away your policy. Review it and ask questions. Understand what will happen if you lose your job or ability to contribute the amount you are signing up to. Will you lose your money? For instance, according to Nancy Aketch, the managing director of Taraji Insurance Agency, you can lose your money if you stop paying before the 3 first three years are over. “You lose everything you had paid for,” she says.

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