Insurance in Kenya, Part II

Continued from here

All too often we hear about various types of insurance policies without really understanding what they are and more importantly, what they protect. The truth is, there are two main types of insurance, namely life insurance and general insurance which covers different aspects in your life.

1. LIFE INSURANCE

Life insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. This provides you with both a protection policy and long-term savings for your peace of mind. You or your beneficiary will be provided with financial benefits if you suffer a tragedy. At the same time, you will enjoy an investment return because part of your contribution will be deposited in an account for the purpose of savings in some cases. You have a choice of maturity periods and there is no forfeiture in the event of cancellation. You are also entitled to personal tax relief when you participate in this (Confirm what the law says)

The coverage period for life insurance is usually more than a year. So this requires periodic premium payments, either monthly, quarterly or annually.

The risks that are covered by Life Insurance Include:

  • Premature Death
  • Income during retirement
  • Illness

The main products of life insurance include:

It is important to note that with branding being a major aspect of any company selling anything, most of the products here could be called anything provided it appeals to the clientèle and makes sense to the boards of the various Insurance firms.

  • Whole Life

As the name suggests, the whole life insurance policies are intended to provide Life Insurance protection over one’s lifetime. The essence of whole life insurance is that it provides for payment of the assured amount upon the insured’s death regardless of when it occurs. Under these policies, the payment of the assured sum is a certainty in contrast to the term insurance contracts. Only the time of payment of the assured sum is an uncertainty.

Whole life policies can be either participating type or non-participating type. Participating type policies are those which are entitled to a share in the distributable surplus (profits) of the Life Insurance Company, whereby the cash value of the policy can go up, with the announcement of bonus / dividend. Non-participating policies have the same benefit throughout the life of the policy.

These are the most commonly sold policies. These policies assure that the benefits under the policy will be paid on the death of the life insured during the selected term or on his survival to the end of the term. Hence the assured benefits are payable either on the date of maturity or on death of the life insured, if earlier.

There can be the following types of whole life policies;

– Ordinary Whole Life Insurance

–  Limited Payment Whole Life Insurance

– Convertible Whole Life Insurance

  • Endowment

Endowment policies assist in providing for the payment of a lump sum amount for a specific purpose, say, provision for retirement, meeting the needs of the child etc. The money required for the purpose will be built up whether the person is alive till that date or not. Like whole life insurance policies, endowment policies can also be of participating and non-participating types.

  • Annuities

An annuity is a series of periodic payments. An annuity contract is an insurance policy, under which the annuity provider (insurer) agrees to pay the purchaser of annuity (annuitant) a series of regular periodical payments for a fixed period or during someone’s life time. There are many versions of these. Read through various insurances’ websites and fliers, you will understand them. Press too.

  • Medical/ Health Covers

Depending on your needs, you can benefit from a competitive array of designed-to-fit plans across the industry. Medical Schemes offer In-Hospital (In-Patient) and Out-Patient medical insurance products designed to meet the prevalent Medical Insurance needs of the valued customers. The covers are differentiated to reflect the diversity of the different clients in the market.

It is important when sourcing for a medical cover to understand the fine print. For instance if the cover is for Kshs. 3 million; be certain what the 3 million covers, is it for in-patient, is it for out-patient cover. Is it for accidents, or what amount is allocated to accidents and what is for general illness? If you are pregnant, seek to understand whether they consider C-sections and other complications associated with pregnancy. Does the fine print cover all types of accidents? Or is it specific on some certain kind? Be armed with your questions as you seek to find a cover for yourself.

If you doubt the need to get a medical cover, ask me, if I cannot convince you that my cover is settling my bill now well over 1.2 million in less than 80 days, then ask anyone who’s been admitted with an issue that required surgery. Jipange!

2. GENERAL INSURANCE

General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses.

The coverage period for most general insurance policies and plans is usually one year, whereby premiums are normally paid on a one-time basis.

The risks that are covered by general insurance are:

– Property Loss

– Liability arising from damage by yourself to a third party

– Accidental death or injury

The main products of general insurance include:

Motor Insurance

–  Fire/ House owners/ Householders insurance

– Personal accident insurance

– Medical and health Insurance

– Travel Insurance

I am certain everyone has an insurance agent they know… I am not an expert on this yet. I know enough of them. If you need help I can send one. The last part of this will probably be establishment of a brokerage and agency, it interests me most so… till then…

To be continued…

I intended for there to be a section that talks about starting an insurance brokerage and agency. re-inventing the wheel is not such a good use of time especially if there is a wheel that runs just fine. There is some information HERE. It is standard information that can be useful.

If any of you need help getting a cover (of any kind; motor, health, investment, corporate…) for anything, send me mail on bizcare@linkedconsultkenya.com. I know a few things and I can get you somewhere in time.

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