Life insurance is a long-term contract between an individual (policy holder) or organisation and an insurance company.
The insured pays the premium and the insurer promises to pay a sum of money to an appointed beneficiary when the insured event occurs. Insured events that trigger payment from the life insurance cover include death, critical illness, terminal illness, temporary or permanent disability. Other expenses such as funeral expenses may also be covered. Read the contents of your life insurance policy to know what is covered.
Life insurance can either be for an individual or it can be taken out for a group of people such as employees, a chama, a SACCO, or a large extended family. The policy document in the case of a group will bear the name of the group as the entity that is paying the premium. Group life is generally more affordable compared to individual policies.
There are three broad types of Life Insurance Covers:
- Term Assurance
This policy offers protection only for a particular period which is agreed upon by the insurance company and insured. It is the simplest and cheapest form of life insurance since it provides life cover only with no investment benefits. The insurance company will pay out the full sum assured if the insured passes away within the insurance period. There are no benefits that are payable if the insured is still alive when the policy matures.
- Whole Life
A whole life policy offers life-long protection to the insured. The insured selects how they would like to pay premiums. It could be throughout your life, you can chose to stop payment at a particular age (for example at 60), or you can chose to pay one single premium.
An endowment policy combines both protection and investment. The insurance company will pay out the full sum assured if the insured passes away within the insurance period. If the insured is still alive when the policy matures, the insurance company will pay out the sum assured and all the bonuses earned in the course of the policy.
This an insurance policy used to pay for funeral expenses. It covers the insured including their nuclear family i.e. spouse and children. It can also be extended to cover parents or siblings.
It can be purchased as a stand-alone product or as part of another insurance product.
The amount of premium payable determines the sum assured.
Upon demise of the insured or any of their immediate family members, the insurance company pays the claim to the appointed beneficiary within 48 hours of receiving notification and relevant documentation.
Personal Accident and Group Accident Insurance
A Personal accident insurance cover provides financial benefits to an individual if he/she is involved in an accident resulting in injuries or death. While, group personal accident insurance provides financial benefits to a group of people such as a family, employees, chamas, learning institutions, SMEs or any other group of people with common interest.
Drivers of motor vehicles are encouraged to take personal accident insurance since they are not covered under the motor insurance whether third party or comprehensive.
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Medical insurance, also referred to as health insurance, covers the medical expenses incurred by the insured or their dependents. It can be taken by an individual or a group of people.
The policy can be out-patient (walk in and out of hospital) only or in-patient (admission) only. It can also have a combination of both in and out patient.
Each medical insurance cover is different in terms of the medical treatments it can cover and the limits of coverage. This also determines the premium paid.
Most medical insurance policies can be extended to cover additional benefits such as optical and dental cover, congenital defects, maternity expenses, pre-existing conditions, chronic ailments, psychiatric conditions among others.
Most covers exclude cosmetic surgery or treatments, age-related senility or insanity, family planning, and treatments not administered by a registered medical practitioner.
It is therefore very important to first shop for a policy that meets your needs and then review the policy document together with your insurer to ensure you have clearly understood what is covered and what is not covered.
Travel Insurance covers specific events during the course of travel. Covered risks and exclusions vary significantly by policy type, insurer, and travel preferences. The risks typically covered include;
- Trip interruptions
- Cancellations (entire trip or a section of the trip)
- Lost or delayed baggage
- Carrier or service provider failures
- Emergency evacuations (due to physical threats and medical emergencies)
- Theft and other crimes
- Medical treatment for injuries caused due to travel
- Accidental death (including transportation of remains)
The risks typically not covered include;
- Natural disasters
- Severe weather
- Crimes committed against you or a member of your traveling party
- Lost travel documents or identification papers
- Civil unrest
- Unannounced strikes that render your carrier unable to operate
This policy insures the home. It is also referred to as Domestic Package insurance. It combines coverage for the home that is, the building and household contents as well as domestic workers against death or injury while in the course of employment. The policy also covers the homeowners or occupiers against lawsuits for injury or property damage caused to other people (third parties).
Home insurance can be taken out by a tenant, a home owner or a landlord.
What does Home insurance cover?
Home insurance policy has five (5) sections, A to E, each covering different risks as broken down below;
- Section A – Cover for the structure (building) of your home against risks such as fire, floods, earthquake
- Section B – Cover for your personal belongings or contents such as electronics, jewelry, art, clothes, furniture, and others against risks such as theft, fire, floods, earthquake, e.t.c
- Section C – Cover for items you move with outside the house such as mobile phones, watches, IPads, laptops, rings, cameras, spectacles. against risks such as accidental damage, theft, fire, floods, earthquake, etc. This section is also referred to as All Risks
- Section D – Liability protection, this covers domestic workers for injury or death while undertaking domestic work.
- Sections E and F – Coverage of owners and occupiers against lawsuits for injury or property damage caused to other people within the property or by objects or actions originating from the property.
You can choose which of the sections you wish to take up depending on whether you are a tenant, living in your own home or are a landlord.
Can I purchase home insurance if I am renting a house?
Yes. You can purchase home insurance as a tenant for the content in the home, items you move outside with and liabilities for domestic workers and third parties.
Why is it important to take an inventory before purchasing Home Insurance?
Before you purchase home insurance, you will be required to provide an inventory. A home inventory is a list of all the things in your house including electronics, furniture, kitchen equipment and jewelry. It is important to record the serial numbers of the major appliances, keep the receipts and user manuals safely.
Having an up-to-date home inventory will help you insure the correct value of property and get your insurance claim settled faster.
How often should I review my policy?
Home insurance is an annual cover. However, if in the course of the year you make improvements to your home such as fire and burglar alarm systems, upgraded plumbing or electrical system or if you make a major purchase. Inform your insurance company about the improvements or changes.
You may need additional cover if there is a change in the value of your home or its contents.