Life insurance in Kenya
Life cover exists for one purpose: to replace income that other people depend on, if it stops. If nobody depends on your income, the case for it is weaker — and we will tell you that rather than sell you a policy.
Three kinds of policy
| Type | Pays | Suits |
|---|---|---|
| Term | On death within the term. Nothing if you survive it. | Income replacement while children are dependent or a mortgage is running |
| Whole of life | On death whenever it happens, subject to premiums being paid | Estate planning and permanent dependants, where cost is not the constraint |
| Endowment | On death, or a maturity amount if you survive the term | People who want a savings element and accept a higher premium for it |
| Group life | On the death of an employee, usually a multiple of salary | Employers providing a staff benefit alongside WIBA and medical cover |
Most Kenyan households are best served by term cover sized properly, rather than whole-of-life cover sized to fit a budget. The exception is a genuine estate-planning need, which is a different conversation.
How much cover
Work it out from the household, not from a rule of thumb. Four inputs are enough.
- Income
- Annual income, and the number of years the household would need it replaced
- Debts
- Mortgage balance, car loans, school fees arrears, any guaranteed obligations
- Future costs
- School and university fees, and the cost of a home being paid off
- Already covered
- Savings, investments, existing group life through work, and any policy already held
Income of KES 60,000 a month is KES 720,000 a year. Ten years of replacement is KES 7,200,000. Add a mortgage balance of KES 2,000,000. Subtract existing group cover of KES 2,160,000.
Indicated cover: about KES 7,000,000. The number moves with the assumptions, which is the point — the assumptions are the conversation.
Beneficiaries
A policy that pays into an estate can take months to reach the family. A policy with a named beneficiary usually pays faster.
- Name a person, not "my estate", wherever the product allows it
- Tell the person you have named them, and where the policy document is kept
- Review the nomination after a marriage, a birth, a separation or a death
- For minors, consider a trust or a guardian arrangement rather than a direct nomination
Exclusions and waiting periods
Life policies are not unconditional. The common limitations are worth knowing before you sign.
- A waiting period, commonly applying to suicide, stated in the policy
- Non-disclosure of medical history, which is the most common ground for a declined claim
- Death from an excluded cause, where the policy names one
- Lapse for non-payment, which ends cover and may forfeit premium
Answer the medical questions fully and honestly. A policy that is declined at claim time because of an undisclosed condition is worse than no policy, because the family believed they were covered.
Group life for employers
A multiple of salary paid to an employee's family, arranged as a staff benefit alongside WIBA and medical cover. Priced on the group's age profile and payroll. See group benefits.
A note on tone
This is a bereavement product. Nobody should be sold it through fear, and no return should be promised on it. If a conversation about life cover feels like pressure, it is being done wrong.
Products we arrange
Life and education policies
Named products placed with licensed underwriters. What is available to you, and on what terms, depends on the underwriter and on underwriting acceptance.
Life
- Better Life Cover
- Money Plus Cover
Education
- Bima Ya Karo
- UniPlan Cover
Education policies are savings plans with a life cover element. The payout is tied to the school or university dates you nominate, so the term has to match the child's age.
Questions we are asked
What is the difference between term and whole-of-life cover?
Term cover pays only if you die within the term — usually the years your family depends on your income. Whole-of-life cover runs for your lifetime and costs substantially more. For most people with a mortgage and young children, term cover does the job at a fraction of the price.
How much life cover do I need?
Start with annual income multiplied by the number of years your family would need it, add debts and school fees, then subtract savings and existing cover. Ten times annual income is a common starting point, not a rule. The right number depends on your family, not on a formula.
Is life insurance the same as an investment?
No. Some products combine the two, and they usually do neither job well. If the aim is savings, a savings vehicle is clearer and cheaper. If the aim is protection, buy protection.
What happens if I stop paying?
Term policies lapse if premium is not paid, and a lapsed policy pays nothing. Some products have a grace period and some have a surrender value. Check which applies to the policy you are being offered.
Who should I name as a beneficiary?
A named person, not an estate, wherever the product allows it — a named beneficiary is usually paid faster and avoids the estate process. Tell the person you have named them, and review the nomination when circumstances change.
Work out the number before you choose the product.
Income, debts, school fees, and what the family already has. Bring those four and the amount of cover stops being a guess.