Life insurance is a contract between an insurance company and an insured (customer). The insured pays the premium and the insurer promises to pay a sum of money to an appointed beneficiary when the insured event occurs.
Life Insurance can either be for protection against the insured event (terminal or critical illness, death, disability among other risks) or it can be an investment where the aim is to save and grow your money.
There are three broad types of Life Insurance Covers:
a) 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.
b) 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.
Group Life Insurance Cover
This is a life insurance cover that a group can take. Groups including SACCOs, Chamas and Investments groups can take group life insurance. Many employers take group life insurance for their employees as a key benefit.
The policy document in group life bears the name of the ‘group’ as the entity that is paying the premium. Group life insurance is generally cheaper compared to individual policies.
Pension is a regular payment to an individual during retirement from an investment fund towards which that individual or their employer had contributed during their working life.
Pension is a form of insurance. It ensures that one is able to provide for themselves in retirement thus protecting against old age poverty.
Why should I plan for retirement?
You may be young and energetic today, but with time, you will slow down and retire and thanks to advances in medicine, we now live longer.
Living expenses however do not retire. You will still need to eat, go to hospital, pay for utilities (water, electricity, cooking gas), medical bills housing and others.
Planning for retirement helps us have an income that will cater for these expenses and ensure that the quality of life in old age is still as good as when one was active.
Planning for retirement is also important given today’s economic realities where it will be difficult to rely on other people for your daily needs. The family unit is weakening and the traditional notion of parents relying on their children is fading.
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 be purchased as a stand-alone product or as part of another insurance product.
How does it work?
Once one has signed up for the cover and received their policy document, premiums can be paid monthly, quarterly, half-yearly or annually depending on what works for the customer. 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.
Funeral cover can also be extended to cover parents or other siblings.
Personal Accident and Group Accident Insurance
A Personal accident insurance 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.
Medical Insurance and Group Medical insurance
Medical insurance policy, 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.
Does medical insurance cover all medical bills?
Each medical insurance is different in terms of the medical treatments it can cover. This is dependent on the type of cover and on the premium paid. It is therefore very important to review the policy document together with your insurer to ensure you have clearly understood what is covered and what is not covered.
It is also important to understand the expenses that NHIF card will pay for as these are excluded from the private medical insurance cover.
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.
Travel Insurance covers specific events during 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)
What is not covered?
- 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