Home Life Insurance Savings Insurance Why you Need an Insurance Savings Policy

Why you Need an Insurance Savings Policy


In Life, We are all looking for a good Life and to provide the best for our families: food, shelter, clothing, transport, and certain luxuries to an extent. In addition, we must ensure that family social occasions, like marriage, graduation, and other important anniversaries, are celebrated with dignity. Our children must get the best start in life that we can afford. And, what about the capital that we need in order to venture out into our own business on the path to financial freedom?

A savings insurance policy is normally designed to meet this needs. Most policies will pay a lump sum payment on maturity while other will split the payments in partial payments either after maturity or within the policy term. In addition, a savings insurance policy will provide the security that, should your death or permanent disability rob your family of its source of income, these financial goals can still be met.

Say, you wanted to purchase a house in 10 years and you will require close to Kshs. 3,000,000 to bear this financial responsibility. Taking into account the inflation and building costs over this time, you could use an insurance savings Plan by paying a premium of Kshs. 18,750/- per month to meet this need.

Features of a savings Plan insurance policy

  • Benefits and bonuses are usually payable based on the sum assured and policy term chosen by you.
  • Premiums are normally pre-determined and fixed, based on your selection, affordability and cost of need.
  • The policy term can varies according to customer needs and maybe between 5 to 30 years depending on your financial plan.
  • Premium payments can be made monthly, quarterly, semi-annually, or annually, through a variety of convenient methods such as Cash, MPESA, Direct Debit, Bankers order and through Salary Deduction.
  • On death of the life assured, the Sum assured will become payable immediately on death.
  • Maturity benefit payable as a lump sum or in instalments
  • Most savings policies offer loans on against the policy value and most of them are available after 3years
  • There is a Tax relief benefit of 15% of the premium paid up to a maximum of Kshs. 60,000/-
  • Most savings policies have a free-look period of 30 days where you are allowed to cancel the policy and be refunded or make necessary changes.
  • Savings policies offer Bonus which is an addition to the Sum Assured, declared annually by the insurance company, representing the excess of the actual investment return over the expected return.
  • The minimum age at entry is normally 18 years while the maximum age will be determined by the insurance firm.
  • Most insurers will have a minimum premium and sum assured but no maximum premium or sum assured.
  • Most savings policies will acquire cash and paid-up values after the payment of at least 3 full years’ premium and after it has been in force for at least 3 years.

Additional benefits will get under a Savings Insurance Policy

1.     Accidental Death Benefit
On death of the life assured due to an accident, an additional amount equivalent to the sum assured will become payable immediately on death.
2.     Total and Permanent Disability

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 instalments over a period of 36 months from the date of the accident.

3.     Waiver of Premium

Remaining premiums are waived if the life assured is totally and permanently disabled due to accident or illness.

4.     Adult Accident Hospitalization

In case of an accident leading to the injury and hospitalization of the life assured, the insurer will reimburse the in-patient medical expenses incurred subject to a certain maximum.



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