How to change the perceptions of long-term insurance in Kenya

By BENARD ALOO More by this Author   

Long-term or life insurance covers are probably the most misunderstood products in the Kenyan financial and insurance system. If you ever hear someone refer to an

insurer as a fraud or a scam, chances are high that they had a long-term insurance cover and they can’t explain it.

The problem is not even the products available in the market; it is how people rarely care to know about them despite being around for ages.

While many people view long-term insurance as a way to protect their financial future against specific risks, it is actually about killing two birds with one stone — providing both protection and savings benefits.

The savings benefits of long-term insurance are particularly attractive for people who are looking for a reliable way to save for their retirement like in cases with personal retirement or pension plans that have the option for a life cover.

So why aren’t long-term or life insurance covers popular in Kenya? The long-term insurance industry is awash with misinformation and as such, it is placed at the bottom of the list of priorities for an average Kenyan with competing financial needs.

It is probably upon schools and colleges to promote the idea of a long-term insurance as a necessity since they already provide the highest source of insurance information (34 percent) to the population.

At the same time, insurance agents, who provide the second largest source of insurance information (26 percent) are crucial in promoting long-term insurance as the simple and multi-beneficial alternative to the savings culture encouraged by the government that it is.

Insurers probably also need to invest more on digital information and communication channels. Despite Kenyans spending more on digital information and communication channels, it still ranks low as a source of insurance information — lower than newspapers and radio.

In general, the idea to protect oneself and loved ones from the financial burden of future events, while also saving for your future should be just as attractive as having a nice shoe, music system, getting high, a vacation or just looking good, if not more attractive.

However, it is imperative that one understands the life insurance product or cover they buy into and the terms of the contract to minimise instances of perception of being shortchanged by the insurer.