The critical things you need to note before buying life and medical insurance. Photo | Pool


The critical things you need to note before buying life and medical insurance

What you need to know:

  • The first step is being clear on why you need life insurance. This will help you to save on time, enable you to pick the correct term, type, and coverage amount
  • Advertised rates on TV may not be what you will automatically qualify for

You are at a point you are making some money for your daily upkeep. But you want to minimise the risks of being dirt poor in the future. Thankfully, you know a little about insurance policies, and you are attracted to getting health or life insurance. But your worry is, how do you know which is the right deal? 

Relax, that's why are here. We will tell you more about life and health insurance, the do's and don'ts, and the small print they don't want you to read. 

Life insurance

The do's

Why and what type of life insurance do you need?

According to Rhina Namsia, the chief executive officer of The Acemt Consulting, a financial planning and investment advisory firm, the first step is being clear on why you need life insurance. This will help you to save on time, enable you to pick the correct term, type, and coverage amount. "For example, Peter wants to buy life insurance to protect his daughter if something were to happen to him. He will need to have coverage for 20 years with a higher amount. On the other hand, Steve has a vehicle loan 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," says Namsia.

How much coverage do you need?

You need to know the amount of coverage you need. "Most people simply say 'I want Sh1 million, or Sh5 million in coverage'. When asked how they came up with the amount, the majority aren't able to justify it," says Namsia. Although these may be attractive round numbers, you may be way off from your actual needs. Namsia says that the risk of being unable to justify the amount of coverage you want is being either overinsured or underinsured. Being underinsured means that you cannot claim the coverage you require. Being over-insured means that you'll be paying more for coverage you don't need.

Be realistic

The life insurance rate will be based on you as an individual. This means that the advertised rates on TV may not be what you will automatically qualify for. "Be completely honest and upfront about your health and lifestyle when picking life insurance. Work with an experienced agent who is willing to understand your budget and needs," says Namsia. You will also need to keenly review the life insurance company you are signing with. "You want to make sure that the company has been in business for a while and that it will be in business for a long time, has a solid financial history, and is listed for accountability," she says.

The don'ts

Price vs value

Don't shop for the best price but the best value product. Price is important; however, you need to look at the features of the product to determine the value. For example, says Namsia, there are countless life insurance companies offering term insurance. By running a quick quote on yourself, you will find out that the price is different. "This is because some companies offer more benefits and features such as living benefits, terminal illness, and riders. Do you want to have a policy that costs about Sh2,000 per month or one that costs Sh2,500 but can be issued without a medical exam?" says Namsia.

Life changes

Don't view the buying process as once and done process. Your life insurance policy needs to reflect changes in your life. It could be as simple as updating your address on file or more complex as changing products. Go over your insurance at a minimum once every 1 to 2 years. Make sure that the contact information is correct, the beneficiaries, and that the coverage amount is adequate. Let your insurer know if something has changed in your life.

Before you sign the dotted line

Don't just sign away. Review the policy, 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 three years are over. "You lose everything you had paid for," she says.

Medical insurance

This is an insurance contract that requires an insurer to pay some or all of your healthcare costs in exchange for a premium.

The do's

Your current health status

If you have one or more medical conditions that require continuous care, such as diabetes or heart disease, you want a plan with a lower deductible and lower co-payments. Namsia says that this also applies if you think you may be expecting a baby in the coming year. "You'll pay a higher premium, but your overall out-of-pocket costs may be lower," she says. Also, factors such as the age of the applicant, location of residence, health status, type of health insurance plan, use of any substance can affect the premiums you will pay.

Review the provider list

The majority of health plans have a list of health providers. If you see a doctor on this list, you'll pay less out of pocket than if you go outside the network. "If you want to keep your own doctor and go to a certain hospital, make sure they're on the provider list," says Namsia. She says that the specifics of each medical plan may differ. Be sure to read the medical plan's Evidence of Coverage.

Questions you need to ask

According to Namsia, you should call the health plan you're considering or talk with someone in your human resources department and ask; Which doctors, hospitals, clinics, or pharmacies participate in the plan? How much does it cost to go out of network? Am I covered during a travel emergency? What are the premium and out-of-pocket costs? What is the most I'll have to pay out of my pocket to cover expenses? Exactly what benefits are covered by the plan and what isn't covered? How are disputes about a bill or service handled? As you get these answers, compare various health insurance policies to get the best coverage.

The don'ts

Don't skip the inclusions and exclusions

This is what is covered and what is not covered by your health insurance policy. "Go through the terms and conditions. This will give you an idea on whether you can file a claim for a specific situation or not," says Namsia.

Don't hide information

According to Ms. Aketch, this may lead to disqualification. At the same time, she cautions that your renewals must not be delayed as this will subject you to long waiting periods. Health insurance policies usually have a waiting period for certain pre-existing diseases.

For feedback write to the editor: [email protected]


You're all set to enjoy unlimited Prime content.