ARE YOU AN INFORMED INSURANCE CONSUMER?
I will tell you about the key aspects of insurance which you need to know before buying insurance. You can avoid many common mistakes people make while shopping around for an appropriate insurance cover. Our aim at Imana https://imana.co.ke/ is to help consumers understand what they are buying.
Let’s sample the insurance industry
There are 49 insurance and 3 reinsurance companies in Kenya. Some of the insurance companies only sell general insurance while others sell life insurance only. Others sell both life and general insurance business.
Insurance can also be bought through insurance agents or brokers. With the introduction of Imana Insurance Agency Imana Insurance Agency, insurance can now be sold online in Kenya and East Africa. Imana gives consumers an opportunity to compare quotes from various insurance companies. The platform represents the interests of clients. All players in the insurance industry are licensed to conduct insurance business.
How does insurance operate?
Insurance operates on the basic understanding that loses and misfortunes occur any time either to us or our businesses. Insurance is informed by the wisdom that it is better to be prepared for setbacks than to regret when losses strike and meet us unprepared.
Those of us who manage insurance know that only a few out of the many insureds exposed to risk will suffer losses. This is why only some cars get stolen in any one year, a few houses catch fire and a few people die in any one period. The premiums paid by the many are used to compensate the unfortunate few who suffer losses. The irony is that no one knows who will suffer a loss or misfortune.
Why do you need to buy insurance?
You need to buy insurance because, when incidents such as fire, theft, motor accidents, sickness and untimely death occur those affected may not be prepared for the financial consequences that follow. They may therefore resort to fundraising or borrowing money from friends and relatives. Unfortunately, such friends and relatives may not replace the financial losses already suffered. In extreme cases, precious family assets such as land, motor vehicle or cattle are sold to offset the cost of such misfortune. This is often done at throwaway prices because of the emergency situation. The purpose of insurance is to ensure that funds are always available in case of such misfortunes.
What are some of the benefits of Insurance?
- Family Protection
Alife insurance policy pays a sum of money to the family in the event of untimely death of the bread winner. In some policies, the payment of sum insured is done in the event of permanent disability or critical illness.
- Peace of mind
When you buy insurance, you have peace of mind because should you lose your possessions, get sick or be involved in an accident etc the insurance company will meet the resulting financial burden to the extent agreed. Hence, insurance creates confidence and eliminates worries associated with uncertainties.
Saving applies to life policies only. A life policy is a long-term contract in which the policyholder has to pay a fixed amount of money throughout the policy duration. This creates discipline and encourages the habit of long-term saving thus helps in creating wealth for future investments.
- Financial guarantee
A life policy can be used as a security/guarantee when borrowing money either from a bank or from a bank or from the insurance company itself.
- Investment vehicle
Life insurance can help a person realize some major goals in life. The goals include buying or building a house, educating children and retiring into financial freedom.
- Tax benefits
All life insurance policies attract a tax relief of 15% on the premium paid subject to a maximum of Ksh. 5,000 per month or Ksh. 60,000 per year.
What should you do before buying insurance?
Before buying an insurance policy, you should ensure that you have understood your insurance needs that the policy will meet. Different policies pay under different circumstances for example;
- For a life policy, a claim is payable upon partial/full maturity or early death whichever comes early.
- For a comprehensive motor vehicle policy, a claim is payable when the vehicle is involved in an accident, is stolen or has caught fire etc.
In order to understand the benefits of a policy, you should seek clarification from the agent, insurance broker or insurance company.
Insurance contracts are contracts of utmost good faith. Because of this, the buyer of insurance will be asked some questions when making proposals. It is Important that you as the proposer answer such questions truthfully to provide the insurer with the same information and understanding about the risk as the proposer.
You should also ensure that you pay the premium as advised. You as the policy holder must ensure that you are issued with a policy document by the insurance company. It is also very important that you read and understand the policy document or enquire on any issues that you don’t understand.
Remember you can always talk to us about any questions you might have about medical, motor, liability and life insurance.
Imana Insurance Agency Kenya Ltd
Westlands, Woodvale Grove, Krishna Centre 4th Floor