To Insure Or Not To Insure? Six Insurance Products To Consider

Saving for retirement. Image from

Six Insurance Products Families and Anyone Should Consider

Money does not buy happiness. The people who say “money cannot buy happiness do not know where to shop” have never had any substantial amount of money. And, unfortunately, neither have I for that matter. There are wealthy people whose lives are sad, even though they have an endless supply of money. What money brings is peace of mind. Anyone would want to know that they can afford the best education for their children or when they are sick, they will afford the best medical care available and so on and so forth.

Insurance is a cover to protect the things you love. Image from
Insurance is a cover to protect the things you love. Image from

The best education for children or the best health care does not come cheap. In the United States, (middle class) parents start saving for college tuition fees immediately a baby comes. The cost of a major transplant (like a kidney transplant) in Kenya is about a million shillings. Tuition fees in private universities such as Strathmore for a degree will also set you back about a million shillings. Not everyone can afford the best medical care and education for their children. However, almost everyone can get it!

Insurance companies have different products that can help families meet their short and long term goals. These products will enable someone to get what they have ever wanted by putting away a few shillings every month so that when the time comes, money can be available. These insurance companies will invest the money you give them as premiums so that it is not eroded by inflation. The insurance penetration in the country is low compared to countries like South Africa or countries in Europe and North America, but there are nice products in the market.

  1. Medical Cover

For me, this is the most important cover one can have for themselves or for their family. It makes one sleep at night knowing that in case anyone becomes sick, they just need to find a hospital and the insurance will pay for the bills. There are many health providers in the country including AAR, Resolution Health and most insurance companies. Normally, one will pay a certain amount (as premium) and be covered for a whole year. I have seen NHIF advertising their cover for ‘hustlers’ which one pays Kshs. 500 per month and their whole family is covered.

In choosing a medical cover, one should consider several things:

• Is the cover both inpatient and outpatient and what are their limits? The limits will depend on how much one can afford. The higher the limit, the better.
• The list of health providers (or hospitals) in which one can get the services.
• Finally, check what is covered. Try and get a cover that covers maternity (including caesarian procedures), dental and optical problems and terminal illnesses.

The best thing is to get brochures from at least three providers and compare the benefits against the premiums.

2. Motor-insurance Cover

This cover is mandatory if you have a car. It is pretty straight forward. What most people do not know is that there are different types. I have heard many people say insurance guys are thieves. It is mainly because there are some blueprint in the policy document that was ignored. The different types are as follows:

Third party: Only covers the other car or the other object or the other person if they die. If they do not die, you will pay for the medical expenses.

Third Party Fire & Theft: Just like the third party but in this case if your car is stolen or catches fire, it is covered.
Comprehensive: Covers the other party and your car. If you were on the wrong, you and your immediate family may not be covered.

Full Comprehensive: Just like the comprehensive cover but in this case, you have an option of adding add ons (or riders) such as Personal Accident (PA) for you and your family which will ensure that you and your family are also covered. You also need to add an excess protector add on.

If you have a car, always make sure you get the full comprehensive. Avoid bargaining for the cover. If you bargain, you will get a basic cover which will still be a cover but when you get an accident and the insurance cannot pay or can only pay part of the amount, you will call them thieves when you are the one who got a useless cover.

3. Education Cover

This is quite self explanatory. You will pay premiums of a certain amount depending on the sum assured and when it matures (mainly when your child gets to high school or university) the insurance company will write you a cheque to pay as school fees. The most important bit about this cover is that in the event of permanent disability or death before maturity, most insurance companies will take it upon themselves to finance the cover (by paying the premiums on your behalf) and when maturity comes, your child will still go to school. It is normally advisable to take this cover as early as possible, even when the child is about three months old.

4. Life Insurance

This is a cover whose sum assured is paid when you die. The main reason why you should take this cover is this. Supposing you take a loan or a mortgage. If you die before you are done paying, it is upon the next of kin to continue paying the mortgage or loan. However, if you have a whole life cover, the money can be used to settle the mortgage or the loan so that your next of kin (who are normally your spouse and/or children) do not have the burden of paying for it.

5. Last Expense

This cover normally comes on its own or as a rider to other covers. Basically, the insurance company meets the last expenses of an individual when s/he dies. It is one of the most affordable cover out there. It ranges from about Kshs 100,000 to over half a million. It is important to note whether the sum assured will also be used to buy flowers and other things or all of it will be given in cash. Sometimes insurance companies will set a sum assured of about Kshs. 100,000 and say money for flowers is say Kshs. 20,000 which is inclusive of the Kshs. 100,000. If is better to get an insurance company that pays the whole amount.

6. Retirement Benefits Schemes

Saving for retirement. Image from
Saving for retirement. Image from

These are not insurance based products but I thought I should include them here. Most people in formal employment are members of a retirement benefits scheme (either NSSF or an occupational benefits scheme). If you are not in employment, you can still contribute to NSSF. There are other schemes available for individuals to join. The retirement benefits sector is well regulated with checks and balances so chances are, your money will be safely invested till you retire.

There are many more insurance products such as endowment policies and term policies (which are very affordable and good for people in business). Moreover, most insurance companies will custom make their products according to the market demands so it is not unusual to get products that are hybrids of two or more policies. Before buying a policy, make sure you read the terms and conditions and make sure you understand them all.

Drop your questions on insurance products in the comment section and we shall discuss further.

Facebook Comments
Previous articleBeauty is not skin deep – skin bleaching is dangerous
Next articleDabbling in Dubai
I am a former investment Analyst who has recently ventured into the business world as a young entrepreneur. In my free time, I use the pen as a sword to shape the world so I can feel how awesome it would have been if I were a writer.