Insurance Explained

Life is unpredictable and that is what makes it exciting. However, some unexpected events can really set you back. Insurance can help protect the things we value the most. Understanding insurance is an important place to start from so that you are able to determine what will work for you.

Understand Insurance is an initiative of the Association of Kenya Insurers

What is Insurance?

Insurance is a contract between an individual or organization (known as the policy holder) and an insurance company. In the contract, the insurer promises to pay the policy holder in the event the specified risk occurs. The policy holder promises to pay a premium to the insurer to cover the risk.

Insurance categories
Insurance falls into two main categories:
Life and General (Non-Life).

Life covers human life, while Non-life or General covers inanimate assets such as cars, businesses, buildings etc.

What is Life Insurance?

We are not sure about tomorrow, so when planning for the future, it is important to ensure that your death will not impact your loved ones financially.

When a person takes out life insurance, it means that in the event of their death the sum assured (financial benefit) will go to their dependents/ next of kin. Other events in life that may trigger payment from the life insurance cover include critical illness, terminal illness, temporary or permanent disability; this is dependent on the terms of the contract. Other expenses such as funeral expenses may also be covered.

Life insurance is a long-term contract between an individual (policy holder) or organisation and an insurance company.