BACK TO BASICS: ALL YOU NEED TO KNOW ABOUT LIFE INSURANCE
Life insurance is designed to reassure you that your dependents will be financially looked after in the event of your death. In Kenya, many life insurance companies have products designed to enhance a policyholder’s savings and investment plans. In fact, over 90% of individual life insurance comprises the savings and investment model with partial maturity at periodic intervals during the term.
When buying this type of policy, you need to know the right type, when you need it, and how to buy it.
Why do you need to take life insurance? Answering this question will save you time, money, and help you pick the right product. When you clearly understand your need for life insurance, picking the correct insurance term, type and coverage amount you need will be easier. The policy will not be a burden to you.
For example, Peter wants to buy life insurance to protect his daughter in the event that something happens to him. He will need to have coverage for 20 years with a higher face amount. On the other hand, Steve has a vehicle loan out and wants to make sure that the car will be paid off if he dies prematurely. In this case, Steve will need a 5 or 10-year term policy with a lower face amount. Steve and Peter have different life insurance needs and therefore need different insurance products.
How much coverage do you need? People looking to take up life insurance simply say, “I want Sh. 1,000,000, Sh. 2,000,000 or Sh. 5,000,000 in coverage.” While these might sound like good figures to throw at your insurer. But they may not always match your actual needs.
Make use of online insurance policy calculators to gauge how much you need to insure based on your current financial position and earnings. At the same time, get yourself a reputable agent who will explain the little details, and pros and cons. A good agent will take time to go over your needs and ensure your coverage is adequate so that you don’t get over-insured or under-insured.
The rates: Will be based on your individual needs. This is why you must be realistic and reasonable with your expectations. If you are not an athlete in perfect health, some of the advertised rates on TV may not be what you can qualify for. Therefore, it is important to be completely honest and upfront about your health and lifestyle when discussing and negotiating with your insurer.
The agent and the insurer: Work with an experienced agent who can get you a product that will meet your needs, within your budget. In addition, make sure you review the life insurance company you are about to insure with. Make sure that the company has been in business for a while and will remain in business for a long time, has a solid financial history, and is listed for accountability.
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The writer is the Business Development Officer at Laser Insurance Brokers (LIB)