What You Should Know Before Buying an Insurance Cover

A man pictured while working on his personal computer.
A man pictured while working on his personal computer.

A majority of Kenyans don’t have any sort of insurance because of various reasons which include; lack of information, high cost of insurance, myths, and mistrust.

The common misconceptions include the belief that some insurance companies don’t cover certain needs, the fear that the process is too complicated and failure to understand the importance of having an insurance cover. 

However, it is important to get insurance to ensure that you are financially secure just in case you face an unforeseen disastrous event.

The insurance cover helps in transferring the risk from the insured to the insurer, thus the uncertainty is removed and a safety net created for an eventuality that things go wrong.

An undated image showing Insurance Regulatory Authority (IRA) offices.
An undated image showing Insurance Regulatory Authority (IRA) offices.

According to Insurance Regulatory Authority, there are 49 registered insurance companies in Kenya that have different policies and packages.

This can be a challenge for many citizens looking for an ideal cover from all the 49 competitors. The situation is made worse by the fact that most buyers will have to go through jargon-laden policy wordings full of conditions with a glaring trust gap in order to purchase a particular cover.

According to a financial advisor who spoke Kenyans.co.ke, Kenyans should be cautious when purchasing any policy since there are sales representatives who sometimes don't say the truth while some also exaggerate quotations.

"Whatever you're shown in inception is not what you get at the end or what is in the policy document. Therefore, people should be keen to check the policy documents to verify the details,” he said.

This article aims to inform you before deciding to subscribe to any insurance policy.

 Factors to consider before purchasing an insurance cover

  • Consider all your options- Approach your potential insurance companies ensure you ask all the questions that come to mind and make sure you’re clear with all the different terminologies and have all the numbers noted down correctly.
  • The Insurance company profile/ reputation- the claim history, market share, terms and conditions for a particular cover that is inclusions and exclusions.
  • Focus on what the policy doesn’t cover- the “exclusions.” Insurance providers will talk a lot about what their policies cover and will plaster it over every marketing and promotional item you can find. Ask the insurance provider to explain every single exclusion before you get too deep into the conversation.
  • Consider your budget- Before you subscribe to a policy, assess your budget to judge if you’ll actually be able to make your payments on time.

What are insurance premiums?

An insurance premium is the amount of money an individual or business pays for an insurance policy.

Common types of insurance covers;

Life insurance: The cover ensures one’s dependents are financially secured in the event of the breadwinner’s untimely demise.

Health insurance: The insurance caters for treatment, hospitalisation and medical costs in case of illness.

Education insurance: The cover provides funding for a child’s educational expenses.

Car insurance: It cautions the owner of the vehicle from meeting expenses in case of an accident or theft. May also compensate for damages to one’s car during floods or earthquakes. Additionally, it covers third-party liability where one has to pay damages to other vehicle owners.

Key Person Insurance: Key person insurance is a life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums if the insured is still alive when the policy matures.

WIBA (Work Injury Benefits Act) insurance: a legal requirement for every employer in Kenya. Employee benefit plan enforced by the Kenya law that guarantees compensation when by accident, they suffer injury, become disabled or die while at work.

Term Assurance- This policy offers protection only for a particular period which is agreed upon by the insurance company and insured. The insurance company will pay out the full sum assured if the insured passed away within the insurance period. No benefits payable if the insured is still alive when the policy matures.

If an insured person dies and doesn't have a next of kin what happens?

if the next of kin is not available, the insurance company will trace the rural home for the deceased and through the help of local administration, they'll be able to identify who to take the benefits.

If the beneficiaries are not found at all, the benefits shall be taken to unclaimed financial assets Authority (UFAA) to announce or declare the assets so that the beneficiaries can be found.

How do I make a claim and how long does it take?

When the policy matures, the insurance company will contact you to collect your benefits. The insured or beneficiaries can also get in touch with the insurance company if they have not made contact.

In the event of death or disability, the insurance company should be notified immediately. The necessary forms should be completed and the person making the claim will be advised on the required documents to facilitate processing of the claim. Claims are settled within 30 days of submitting the required documents.

In conclusion, it is important to note that after purchasing any insurance you need to regularly revisit your insurance requirements. As time passes, our needs tend to change as well. Therefore, you should actively revisit your insurance arrangements and compare them against your actual needs annually.

Also remember to keep all your correspondence with your insurance provider stored safely as these are important and legally binding documents.

National Health and Insurance Fund (NHIF) Offices Building in Nairobi. Monday, November 18, 2019.
National Health and Insurance Fund (NHIF) Building in Nairobi. Monday, November 18, 2019.
Simon Kiragu
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