Saturday, July 13, 2024

Everything you need to know about buying life and medical insurance in Kenya

Life insurance is designed to reassure you that your dependants, such as your children or your spouse, will be financially looked after in the event of your death.

This means that when buying this type of policy, you will need to know the right type, when you need it and how to buy it.

Life insurance

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The do’s

Why and what type of life insurance do you need?

According to Rhina Namsia, the chief executive officer of The Acemt Consulting, a financial planning and investment advisory firm, the first step is being clear on why you need life insurance.


This will help you save on time, enable you to pick the correct term, type, and coverage amount.

“For example, Peter wants to buy life insurance to protect his daughter if something were to happen 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,” says Namsia.

“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?

You need to know the amount of coverage you need. “Most people simply say ‘I want Sh. 1 million, Sh. 2 million or Sh. 5 million in coverage’. When asked how they came up with the amount, the majority aren’t able to justify it,” says Namsia.

Although these may look like attractive round numbers, you may be way off from your actual needs. Namsia says that the risk with being unable to justify the amount of coverage you want is being either over insured or under insured.

Being under insured means that you cannot claim for the coverage you require. Being over insured means that you’ll be paying more for coverage you don’t need.

Be realistic

The life insurance rate will be based on you as an individual. This means that the advertised rates on TV may not be what you will automatically qualify for.

“Be completely honest and upfront about your health and lifestyle when picking life insurance. Work with an experienced agent who is willing to understand your budget and needs,” says Namsia.

You will also need to keenly review the life insurance company you are signing with.

“You want to make sure that the company has been in business for a while and that will be in business for a long time to come, has a solid financial history, and is listed for accountability,” she says.

The don’ts

Price vs value

Don’t shop for the best price but for the best value product. Price is important; however, you need to look at the features of the product to determine the value. For example, says Namsia, there are countless life insurance companies offering term insurance.

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By running a quick quote on yourself, you will find out that the price is different. “This is because some companies offer more benefits and features such as living benefits, terminal illness, and riders.

Do you want to have a policy that costs about Sh. 2,000 per month or one that costs Sh. 2,500 but can be issued without a medical exam?” says Namsia.

Life changes

Don’t view the buying process as once and done process. Your life insurance policy needs to reflect changes in your life. It could be as simple as updating your address on file or more complex as changing products.

Go over your insurance at a minimum once every 1 to 2 years. Make sure that the contact information is correct, the beneficiaries and that the coverage amount is adequate. Let your insurer know if something has changed in your life.

Before you sign the dotted line

Don’t just sign away. Review the policy, and ask questions. Understand what will happen if you lose your job or ability to contribute the amount you are signing up to.

Will you lose your money? For instance, according to Nancy Aketch, the managing director of Taraji Insurance Agency, you can lose your money if you stop paying before the 3 first three years are over. “You lose everything you had paid for,” she says.

Medical insurance

This is an insurance contract that requires an insurer to pay some or all of your healthcare costs in exchange for a premium.

The do’s

Your current health status

If you have one or more medical conditions that require continuous care, such as diabetes or heart disease, you want a plan with a lower deductible and lower co-payments.

Namsia says that this also applies if you think you may be expecting a baby in the coming year. “You’ll pay a higher premium, but your overall out-of-pocket costs may be lower,” she says.

Also, factors such as age of the applicant, location of residence, health status, type of health insurance plan, use of any substance can affect the premiums you will pay.

Review the provider list

Majority of health plans have their list of health providers. If you see a doctor within this list, you’ll pay less out of pocket than if you go outside the network.

“If you want to keep your own doctor and go to a certain hospital, make sure they’re on the provider list,” says Namsia. All individual and small medical plans have to cover hospitalization, emergency services, laboratory tests, maternity and new-born care, outpatient care (doctors and other services received outside the hospital), paediatric services, prescription drugs, and preventive services.

However, Namsia says that the specifics of each medical available plan may differ. Be sure to read the medical plan’s Evidence of Coverage.

Questions you need to ask

According to Namsia, you should call the member services department of the health plan you’re considering or talk with someone in your human resources department and ask;

Which doctors, hospitals, clinics, or pharmacies participate in the plan? How much does it cost to go out of network? Am I covered during a travel emergency? What is the premium and out-of-pocket costs? What is the most I’ll have to pay out of my own pocket to cover expenses?

Exactly what benefits are covered by the plan and what isn’t covered? How are disputes about a bill or service handled? As you get these answers, compare various health insurance policies to get the best coverage.

The don’ts

Don’t skip the Inclusions and Exclusions

This is what is covered and what is not covered by your health insurance policy. “Go through the terms and conditions. This will give you an idea of whether you can file a claim for a specific situation or not,” says Namsia.

Don’t hide information

According to Ms. Aketch, this may lead to disqualification. At the same time, she cautions that you renewals must not be delayed as this will subject you to long waiting periods.

Health insurance policies usually have a waiting period for certain pre-existing diseases.

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