The following are some life insurance common questions posed by prospective customers in Kenya. If you are in the market for a life insurance or education insurance policy, see below for answers that will help you make an informed decision.
How much life insurance do I need?
Determining your life insurance needs requires a close examination of your current and future financial obligations as well as the resources at your family’s disposal. Some of the things you need to consider to come up with an accurate figure include:
- Funeral costs
- Mortgage payments
- Future obligations like school fees
To meet the above obligations, your surviving family will draw on existing resources such as your spouse’s income, existing savings and investments, other income-generating assets, and life insurance you held (this could be personal life insurance or insurance taken out by your employer)
The estimated life insurance coverage that you need will be the difference between current and financial obligations, and what your surviving family can muster. This may sound complicated which is why you need a qualified insurance guru to help you figure out how much life insurance you need. If you are not ready to meet with an insurance agent and just want a preliminary sense of your life insurance needs, please complete our life insurance needs assessment form and we will get back to you with a rough estimate of how much life insurance you need to protect your family.
What if I am unable to pay the premiums after taking the policy?
The main reason that leads to people stop paying for their policy is a change in financial circumstances occasioned by a job loss or adverse business event, a critical illness or permanent disability.
Insurance companies will typically give you a one-month grace period should you miss a premium payment. After the lapse period passes, then the policy lapses. However, you can always pay the arrears and reinstate the policy after it has lapsed and continue enjoying the policy benefits.
Depending on how long you have paid for your policy, you could lose all your money or have the option to convert your policy into a paid-up policy, or surrender the policy and receive the surrender value.
In most cases, a policy can only be converted to a paid-up policy or have a surrender value after 36 monthly premium instalments (or 3 years) have been paid.
In a paid-up policy, the sum assured is reduced to the equivalent of premiums already and further premiums are no longer due. The policy then remains active until its maturity date.
Should I take an Education Insurance Policy if I don’t have a child?
Yes, you can. You need not wait until you have a child. Most insurance companies will allow you to do so.
In the event that you have several children, you can opt to take up different policies or simply fill one form since the payment is usually made to you (the parent) and not to an institution or a third party.
Can a life insurance policy be used as a security for a loan?
Yes, a life insurance policy may be ceded as a security subject to the cash surrender value of the policy at the time.
It is also possible to get a policy loan for the amount of surrender value a policy has accumulated.
What are exclusions in a life insurance policy?
Exclusions are events that are not covered by an insurance company. Typical life insurance exclusions in the Kenyan insurance industry include:
- Suicide/attempted suicide in the first 2 years.
- Claims arising from criminal activities e.g. death while committing a crime.
- Death as a result of the abuse of alcohol and related substances.
- Death and permanent disablement arising out of an act of war, military action, terrorism, riots, civil commotion.
- Medical conditions not disclosed prior to issuance of policy. Failure to disclose an existing medical condition on the insurance application form amounts to a failure to disclose a material fact.