Why Life Insurance Policy in Kenya

Posted: 22nd March 2019
Life Insurance

Why Life Insurance Policy in Kenya is should be a priority in your Life! When is the last time you thought of preparing for your death? I know that look on your face. In the African culture, we don’t talk about death as it is bad omen. Usually, many Kenyan communities have organized themselves into […]

Why Life Insurance Policy in Kenya is should be a priority in your Life!
When is the last time you thought of preparing for your death?

I know that look on your face. In the African culture, we don’t talk about death as it is bad omen.

Usually, many Kenyan communities have organized themselves into groups that assist each other at the community level, in case of death, sickness among other events. This has led to reluctance in purchase of life insurance covers as their community level arrangement feels more convenient.

But think with me.

Have you heard of cases where ‘bodies’ were stuck in morgues because the loved ones could not clear the hospital bills? And then there are those cases where the family members went ahead to borrow money from banks or shylocks to cover funeral expenses. In other cases, some family members even use title deeds as collateral to get their loved one discharged from the mortuary.

Culture is good but we are living in times where we experience challenges in paying for funeral costs. Many of us shun away from the discussion about health but unfortunately, we can’t avoid the discussion on funeral expenses and the security of your loved ones’ future, after one passes on.

What is Life Insurance Policy?

Life Insurance Policy is designed to protect your family and the people depending on you for financial support in the event of your untimely demise. In short, it provides a secure financial umbrella to your immediate family members. With the life insurance cover, one pays monthly contributions for a specified period of time then in the event of death, a death benefit is paid to one’s beneficiaries i.e. what is mentioned in the policy document. Key to note is that life insurance has not only to do with your life but it also covers the financial consequences that come with the loss of life. It has also evolved to provide more options such as building wealth or tax-free investment.

Life Insurance Policy covers;

  • Funeral expenses
  • Outstanding debts and mortgages
  • Planned educational expenses
  • Lost income

Life insurance Policy does not cover;

  • When death is a result of suicide
  • The life insurance policyholder was murdered by their immediate family member/ beneficiary
  • The death was a result of criminal activity
  • The cause of the death was excluded

How Much Coverage To Buy?

The death benefit in a life insurance policy should be high enough to replace the income (after tax) you would have earned, had you lived a full life, assuming that you can afford the annual premiums. The proper amount secures the future of your beneficiaries so that they can continue to live as they used to, even if your income is no longer available. The actual amount that you should buy is dependent on your present and future incomes, any specific circumstances affecting you or your beneficiaries, including health status and your existing budget and premiums.

Terminologies used in life insurance?

Insured; This is the individual, whose life is covered by the policy.

Sum assured; The amount of life insurance coverage you have purchased from an insurance provider.

Policy Term; This is the stipulated time of the policy you have taken.

Premium; This is the amount you pay periodically to the insurance provider, to keep the policy in force. Payments can be done on monthly basis, quarterly, semi-annually or annually.

The Life Coverage Policy Document; This is the physical document that contains the terms and conditions and the details of the contract between you as a policyholder and the insurance company.

Partial Maturity; There are types of insurance policies, where you are paid before the end of the policy term.

Beneficiary; The person whom you have named in the policy contract to receive the benefit upon your demise.

Surrender value; After a successful payment of the premium for at least 3 years, you can surrender the policy to the insurance provider, when you can no longer afford to pay the premium or you are no longer interested in the policy.

Conclusion

Life Insurance is very significant. Secure the happiness and future of your loved ones.

Article by: Nelly Tuluba

Image: Raw Pixel Images

Disclaimer; The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of GA Insurance. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of GA Insurance concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.