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Here are the common terms you will get in an education policy and their meanings

By
Bima Mtaani
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The Life assured

In insurance, this term refers to the person whose life is covered. In the event of untimely death or injury of this person, a claim is payable.

Beneficiary

This is the person, nominated by the life assured, who will receive the sum assured in case of death of the life assured.

Sum assured

This is the amount payable by the insurance company to the life assured on maturity of the policy, or to the beneficiary of the life policy in case of death of the life assured.

Bonus

This is the amount added to the sum assured, declared annually by the insurance company, representing the excess of the actual investment return over the expected return.

Rider:            

This the extra, additional or supplementary benefit which is added to the main product.

Assignment

This is the transfer of ownership rights under the policy from the policyholder to another person

Automatic premium loan

This is an amount charged to the loan value of the policy to pay the full or part of the premium due

Basic sum assured

This is the amount of life insurance selected by the policyholder stated in the policy specification schedule or as later changed in accordance with the terms of the policy

Benefit

This is the amount payable under the policy or under any rider contract attached to this policy

Contract

This is the policy, and other written submissions and any supplementary contract applied for which is attached thereto and stated to be a part of the policy

Maturity value

This is the value on the maturity date or on the elective maturity date (as the case may be) less any outstanding loan.

Maturity date

This is the date on which the maturity benefit under this policy is payable. Maturity date and maturity benefit are defined in the policy

Outstanding loan

Means the total amount of the policy loans including both principal and accrued loan interest

Policy document

This represent the booklet you are given that has the terms and conditions of the agreement between the insured and the insurer.

Proposal form

This is a written application for insurance on the company’s forms signed by the policyholder to purchase benefits under the policy and under any supplementary contract attached to the policy. Copy of the policy application is available to the policyholder upon request

Commencement date

This is the date on which the policy takes effect.

Policy schedule

This is a schedule signed by the company and attached to the policy which includes the identification of the policyholder, the assured, the policy date, the sum assured, the supplementary contacts and other information

Policyholder/Assured

Means the purchaser and owner of this policy as shown in the policy application, unless his/her identity is later changed in accordance with the terms of this policy, the policyholder/assured may be someone other than the life assured

Premium

The amount stated in the policy schedule, payable by the policyholder to the company in respect of the policy and in respect of the rider contracts

Reinstatement/revival

Means the restoration of a lapsed or reduced paid-up insurance policy to a premium paying status. Reinstatement/revival is subject to the company’s consent and requirements as provided in the policy and restores the benefits previously provided under the policy

Substandard risk

This means a life assured that has been charged an additional premium due to some form of medical impairment or occupational risk

Surrender of the policy

Means the option whereby the policyholder voluntarily discontinues his policy in return for its cash value less any outstanding loan.

Premium paying term

This is the duration in years over which premiums require to be paid before maturity date

Policy term

This is the duration in years from commencement date to maturity date of the policy

How Does an Education Insurance Policy Work

By
Chief hastings majani
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Education is very key to the success of an individual and the society at large. Every parent/guardian would love their children to have a good education to help them in associating well in the society and compete with other people in today’s world for the scarce opportunities available. A good education equips one with everything they need to help them achieve economic freedom and to make their dreams come true. Quality education for your child’s should therefore be your top priority.

However, due to uncertainties such as the increasing costs of higher education, insufficient funds or the premature death of one, both parents and basically the bread winner, a child may not be able to complete his education or pursue his/her future dreams. This is the reason as to why his/her future should be anticipated

Education policies allow you to save in advance. Assuming you have a child who will require fees for high school and university. You can contribute a small amount of money on monthly basis and thereafter, when you require school fees, the insurer will pay. This is normally done after a certain specified time. A school fees policy will also pay school fees in the event of your untimely death. For example, if you had taken a policy for 10 years and unfortunately lost your life in an accident after contributing for just 1month, the insurer will still pay the entire school fees when it’s due.

The target amount in a school fees is normally referred to us the sum assured. Assuming you are targeting to have Kshs. 2 million in the next 5 years, your sum assured will be the Kshs. 2 million. This amount is normally paid on maturity of the policy. The insurer will add bonuses to this two million. Bonuses are normally declared every year according to the performance of the insurer financially and would normally be a percentage of the sum assured. In our case example, if the company you have taken a policy with declares a bonus of 5% on each year. Our yearly bonus will be 5% of Kshs. 2,000.000/- which will give a yearly bonus of Kshs. 100, 000/- translating to Kshs. 500, 000/- total bonuses. On maturity of the policy the insurer in our case example will pay Kshs. 2,500,000/-. An education policy will also pay in case of Permanent disability of the client.

It is important to note that in an education policy, the parent or guardian is normally the Life assured and the child will be the beneficiary. The premiums payable will be pre-determined and fixed based on the agreement between the insurer and the customer at the inception of the policy. The amount payable will depend on the customer and the value they have attached to the child’s education. An education policy allows you to determine the period of the policy based on when you need the money. You are allowed to choose a flexible way of paying premiums like on monthly basis, quarterly, half yearly, annually or by paying a single deposit. This could be done through your employer, through the bank, paying directly to insurers at their branches or through Mobile money transfers like MPESA and Airtel money. You can purchase this policies directly from the company, through an insurance agent, through banks and brokers. Bima mtaani can still assist you in getting cheaper and more efficient policies.

It is worth noting that anyone above the age of 18years can purchase an education policy in Kenya. Some companies will fix a minimum premium or amount payable but there is normally no maximum limit for the sum assured. Some companies will also have a maximum entry age. Most companies have 60 years which is the normal retirement age for Kenya but some will extend this to 70years.

Most education policies will acquire cash and paid up values after the payment of at least 3 full years’ premiums and after it has been in force for at least 3 years. This means that this policy can be cashed after three years of being in-force. This will vary from company to company with some policies in other companies acquiring a cash value after 1 year.

The amount paid for all insurance policies is based on age of the applicant with young people paying less. This shows you that the earlier you join the better. An individual is allowed to take as many policy as they want according to the number of children they have and their capability.

Here is a summary of the benefits you will get under an education policy.

  • The Maturity benefit will normally be paid as a lump sum or in installments based customer preferences and education needs.
  • All education policies may offer you loans with flexible repayments and this is normally secured by policy value. You do not need any other security to take a loan
  • There is a Tax relief benefit of 15% percent of the premium paid. For instant if you are paying Kshs. 5000/-, you will get a relief of Kshs. 750. In essence you will be paying a monthly contribution of Kshs. 4,250/-. This means on monthly basis, you are saving a total of Kshs. 750/- before the insurer awards you bonuses.
  • On total and permanent disability of the life assured due to an accident, an amount equal to the policy sum assured will become payable in equal monthly installments over a period of 36 months from the date of the accident.
  • The company of your choice will normally waive the remaining premiums if the life assured is totally and permanently disabled due to accident or illness.
  • In case of an accident leading to the injury and hospitalization of the life assured, the company will reimburse the in-patient medical expenses incurred subject to a certain maximum of percentage of the policy sum assured. Some companies will fix a limit for this reimbursement.
  • In case of an accident involving the named beneficiary child leading to injury and hospitalization, the child’s hospitalization expenses will be reimbursed up to a certain maximum of percentage of the policy sum assured. Some companies will fix a limit for this reimbursement.

    Why Health insurance in Kenya Matters

    By
    anthonybaru
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    1

    Is there any good argument against the fact that your health is your single most important asset in this life? Good health is such a foundational matter in life since, without good health, it becomes difficult to achieve any important goal. This simple, yet profound fact is the driving force behind an ever-growing health insurance sector not just in Kenya, but the entire world in general. So, what are the most significant reasons why you need to consider health insurance for yourself, your family, and your dependents?

    The health insurance sector in Kenya has several types of insurance policies targeting the general public. These plans are devised to meet the needs of Kenyans seeking insurance covers for their families and for companies requiring covers for their employees. Here are the key types of insurance policies that you will find in the Kenyan market.

    • Health is irreplaceableUnlike the vast majority of things in life, health is one of the truly irreplaceable aspects. A lot of attention is currently dedicated to encouraging healthy life habits because doctors have known that it’s better to keep in good health rather than to try fix it once broken. Some of the key sources of threats to our health include hereditary illnesses, communicable diseases, and lifestyle diseases. In addition to these threats, there is also always the risk of accidents occurring, accidents that may have short or long term implications to our health. In all these cases, a good health insurance policy can be the help we need should our health start failing.
    • It’s affordableThe number of people taking up health insurance in Kenya has been on the rise. Two key trend are responsible for this. First, more companies are bundling health insurance as one of the benefits they give their employees. This is in effect increasing the number of Kenyans with a health insurance cover. The second trend is the emergence of low cost health insurance policies that offer basic cover for policyholders. The low cost covers are in line with the hugely influential role SMEs are playing in the Kenyan market. As such, the cost of medical insurance is affordable because there is always a policy that can meet the health needs of any person in the country.On a different note, the affordability of a health insurance kenya should be evaluated against the value of one’s health. It turns out that what may seem expensive at first, is actually an affordable component of the health insurance.
    • Accidents happenFinally, you need to have a health insurance plan for the reason that accidents happen, and accidents can have detrimental effects on your health. As already discussed above, germs and genetics are not the only threats to our health. A freak accident can also lead to loss of health. In some cases, managing your injuries after an accident can be a very expensive affair. A good insurance policy will help you to get back on your feet as you work to get back to good health.
    • It earns you a tax reliefThe Kenyan tax procedures assures you of a tax relief of 15% on the premiums you’ve paid per annum. This goes to bring down the cost of medical insurance by that much. If you spend Kshs 50,000 on premiums for a health insurance policy in one year, then you will get a tax relief of Kshs 7500.
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