Life insurance pays out when someone dies - and some policies also pay out as savings. In Kenya they are sold by insurers, banks and agents, often with a lot of pressure. Knowing the types helps you buy what you need. This is general information, not advice.

The main types

  • Term life - pays a sum if you die within the term (for example 10 or 20 years). Nothing if you survive. The cheapest way to protect a family who depend on your income.
  • Whole life - covers you for life, with a payout guaranteed eventually. More expensive.
  • Endowment and savings policies - combine cover with saving, paying out at the end of the term. Popular in Kenya, including as education policies for children’s school fees.
  • Last expense cover - a small sum paid quickly to cover funeral costs. Often sold cheaply, and included by some employers and SACCOs.
  • Credit life - pays off a loan if the borrower dies; banks often require it with a mortgage or loan.

Education policies

Education policies pay out at set dates to fund school or university fees. Before buying, compare with investing the same monthly amount yourself, for example in a money market fund - once fees and charges are taken, savings policies often return less. Their advantages are discipline, the life cover, and insurance relief. See Money market funds.

Insurance relief

Resident individuals can claim insurance relief on premiums for life, education and health policies, within an annual limit. Insurers issue a certificate, and employers usually apply the relief through payroll.

What to check

  • Is the insurer licensed by the Insurance Regulatory Authority?
  • How much cover your family would need - enough to repay debts and replace your income for some years.
  • Surrender value - what you get if you stop paying early. It can be very little in the first years of savings policies.
  • Exclusions, such as suicide in the first year or undisclosed illnesses.
  • The fees and the projected returns on savings policies.

Tell your family

Make sure the people who would need to claim know the policy exists, the insurer, and where the documents are. Unclaimed policies are common.

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