Life insurance has been a blessing to benefactors, yet, for many others, it has been the road not taken. According to a publication by the Kenya Insurance Report, life insurance premiums paid in 2012 will hit KES 427 million up from KES 374 million in 2011. This means that more Kenyans have opted for life insurance in the hopes that they will leave something substantial for their loved ones after they are gone.
So far, we’ve covered Academic and Health Insurance. This week, we take a look at Life Insurance and some of the policies available.
How does it Work?
Life insurance works much like any of the other insurance policies. Fund Managers invest the money on behalf of the policy holder. The money from the schemes can be collected by a beneficiary when the insured person passes on. This is usually, a child, a spouse or a sibling. The insured can also withdraw the money after a certain amount of time, usually determined by the insurer.
The policies are often based on the age, occupation and income of the policy holder. For instance, a factory worker may pay higher premiums as compared to an office clerk due to the high risk associated with heavy machinery. The same thing applies to younger policy holders who tend to pay less monthly premiums than their older counterparts. The returns are also greater if the scheme runs for a longer period of time.
There are two general types of life insurance; Term Life and Whole Life. Term Life insurance expires after a stipulated amount of time while whole life never expires. With the latter, beneficiaries get cash benefits when the policy holder passes on.
Term life insurance is restricted to a particular time-frame, usually anywhere between 5 and 30 years. The scheme can be renewed after it has expired although the holder will be forced to pay higher premiums. This is based on the risk that the holder may die at any given time, depending on how old they are. There are no returns beyond the stated benefit. Nevertheless, Term Life policies are generally cheaper than Whole Life schemes.
With Whole Life Insurance, the policy holder can withdraw the cash or use it as collateral against loans. Withdrawing money lowers the rate of the returns. However, the money keeps accumulating as long as the insurered party keeps paying the premiums. If the policy holder dies, the money goes to the beneficiary in either a lump sum or incremental payments.
How Much does it Cost?
CFC Life Assurance offers an option dubbed Life Vest where policy holders pay a minimum of KES 2500 a month. The scheme has a minimum cover of KES 100,000 as well as savings benefits which include the option to invest the money in money markets, equity and fixed income funds.
Old Mutual offers a life cover for a minimum of KES 1000 a month while Pan Africa’s Flexi Shield has a minimum monthly premium of KES 965. Premiums for comprehensive covers are more expensive and they are determined by the insurer. They can incur monthly fees of KES 3000 or as much as 60,000 per year.
What Are the Benefits?
Based on CFC’s Endowment plan, Term Life policies can bring returns of up to 25% of the assured amount at particular intervals that the insurer chooses. This means that an assured sum of KES 1 million will bring a return of KES 250,000 after every third of the term selected. Returns vary based on what insurer the policy holder chooses.
Some policies, like British-American’s ACCI Shield, offer disability covers. Pan Africa’s Flexi Shield has a 10% discount for spouses of the policy holder who are also seeking life insurance. Others offer disability covers and a fixed monthly income in case the insurered party becomes incapacitated during their employment.
Below is a table of some of the country’s top life insurers and the products they offer:
| Insurer | Basic Cover | Comprehensive Cover | Benefits |
| CFC Life | (Endowment Plan)KES 2500 per month (minimum) | (Whole Life)Flexible premium rates depending on the age and income of the policy holder | Endowment Plan has a cover limit of KES 500,000. It allows a 25% increment after ever third of the term selected. Beneficiaries receive a full amount upon the death of the policy holder during the policy term.Whole Life has the same benefits but also allows for an optional permanent total disability cover and critical illness cover |
| Jubilee Insurance | (Fanaka)Flexible premium rates depending on the age and income of the policy holder | (Career Life Gold)Flexible premium rates depending on the age and income of the policy holder | Fanaka has a minimum assured sum of KES 500,000 Caters for permanent and total disability of the policy holder.Career Life Gold has a minimum assured sum of KES 500,000 (no maximum). Also pays KES 100,000 to the beneficiary for burial expenses even if the policy holder dies 48 hours after application. The beneficiary child is covered for the sum of KES 50,000 |
| Old Mutual | (Greenlight)KES 1000 per month (minimum) | (Greenlight Premium Protection Plan)Flexible premium rates depending on the age and income of the policy holder | Benefit limit of KES 1 million.Both covers offer a tax-free lump sum to the beneficiary upon the policy holder’s death.The Premium Plan also covers permanent disability and illnesses. |
| Pan Africa Life | (Flexi Shield)Premiums of KES 965 per month (minimum) | (Flexi Life)Flexible premium rates depending on the age and income of the policy holder. You can get a policy worth KES 10 million and Pan Africa calculates how much you pay in monthly premiums | Flexi Shield has a tax free cover of KES 2 millionReplacement of income for KES 15,000 per week during times of incapacitation.Accidental medical cover of up to KES 175,000 per accidentCan include spouse at a 5% discount.10% of cash returned if the policy holder goes 3 years with no claims.Flexi Life returns the full amount assured after the policy holder retires. |
| British-American | (ACCI Shield)Flexible premium rates depending on the age and income of the policy holder | (Whole Life)Flexible premium rates depending on the age and income of the policy holder | Benefit limits depend on the policy (They are flexible)ACCI Shield: Caters for total disability, income in cases of temporary disability, artificial limbs, medical and funeral expenses.Whole Life: All the money, along with its benefits, is paid to the beneficiary upon the policy holder’s death. |