Most Kenyans perceive insurance as an obligation other than something beneficial in one’s life. According to Insurance Regulatory Authority, in 2022 there was a 20 percent growth of life insurance uptake, however, this growth was not enough to deepen penetration.
Life insurance is a contract between you and an insurance company. It is a cover designed to protect your family and dependants in the event you lose your income due to illness or death.
There are two main types of Life insurance policies. One is protection policies that are designed to pay a benefit if the event that is insured against happens and the second is investment policies whose main goal is to grow the capital put in by the insurer.
Although many Kenyans shy away from life insurance, it is slowly becoming a necessity in most households. According to 2022 IRA Q3 industry statistics, the total net premium income reported by long term insurance companies (life insurance) in Q3 2022 was KES 95.16 billion representing an increase of 11.9% from KES 85.00 billion reported by the end of Q3 2021. Association of Kenya Insurers (AKI) 2021 annual report shows that in 2022, Life insurance premium increased by 21.5 percent to Ksh.124.7 billion.
The negative perception towards life insurance has majorly contributed to its low penetration. In many Kenyan homes, thinking about, or even planning on life after death, is considered a taboo. This has resulted to many Kenyans being skeptical about purchasing a life insurance cover. Cases of family members being killed by their relatives for insurance claim has been another reason for the skepticism.
Although there are many myths and misunderstanding about life insurance, we have to admit that the cover is essential while planning for our future. With a life insurance cover, one pays monthly contributions for a specified period of time. In the event a bread winner falls sick and is left with no ability to financially support his or her family, this cover helps in offering financial support. In the unfortunate case of demise, a benefit is paid to one’s dependants. Apart from illness and death, life insurance cover empowers people to save for the future as it’s also a savings and wealth planning tool.
As insurers, it is our duty to ensure that the public understand the purpose of a life insurance cover as a form of financial planning. Through extensive education about how it works, we will shorten the knowledge gap and increase the uptake of this vital insurance option.