- The main purpose of insurance is to compensate you in case of a calamity, not to enrich you
- For anyone to earn from insurance contributions you would have to buy an extra benefit known as a rider in form of a unit trust
- A responsible government will always take care of its citizenry by making sure that some medical insurance is available and the cost of the same made affordable
Insurance is so important to a person or a legal entity that it should be made compulsory in a person’s life. That is why our theme this year is, “Insurance as a lifestyle”.
The main purpose of insurance is to compensate you in case of a calamity, not to enrich you. The common perception with the populace is that you are taking out an insurance cover to get rich out of it, and it is actually sold as so by some unscrupulous brokers and agents.
You may be approached by insurance salesmen to buy a life cover and a lot of vocabulary will be spun on how you will earn so much after ten or fifteen years. Yet, a quick calculation of the figures will reveal that you will actually be losing money after the period of cover as compared to if you had invested it in any other sector.
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What most salesmen fail to tell you is that you are actually buying protection that will be accorded by your monthly contributions, also known as premiums and that your coverage starts immediately you pay for the first instalment of the cover that you have agreed to buy.
Life insurance covers nowadays come with this benefit because of the misconception earlier life insurance products had to the insureds’ and the mis-selling that came with it.
This aspect of giving something back from buying an insurance cover has also been felt in the motor insurance industry whereby those insured now can get a no-claim discount (NCD) from not claiming on your car for a year.
This means that you will pay a less percentage amount from your premiums on your renewal of cover.
This makes insurance more exciting and it gives the image of people not out to milk you of your premiums. It is also a good marketing strategy for insurance companies as they set themselves apart from those not giving NCDs.
The government has not been left behind as it makes sure that everyone has their health insured. A responsible government will always take care of its citizenry by making sure that some medical insurance is available and the cost of the same made affordable.
Our government has also made motor insurance compulsory by making sure that every vehicle on the road has a Third Party cover. We know that there are countries where this component of insurance is not mandatory and it would be interesting to know how they handle motor claims as they arise.
Insuring domestic goods is the cheapest of covers and should almost be made compulsory by the government. In litigious countries where your friends can sue you for visiting your home if they accidentally hurt themselves, a domestic cover that has third party liability comes in handy as it will cover the cost of the claim.
This also covers your domestic workers as spelt out in the Workmen’s Injury Benefit Act (WIBA). The cover also insures your personal effects when you step out of your house being the clothes you are wearing, your phone, shoes, watch and the like.
As people travel every day, they need insurance protection accorded by a Personal Accident cover. This is another affordable cover that has huge benefits and which is useful in case of an accident be it motor or otherwise. It will pay for your medical bills amongst other benefits making it a must-have for all.
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Regardless of the notion that insurance companies do not pay claims, it pays for one to shop around for the best insurance company and to also get a knowledgeable insurance broker or agent who will act as your go-between with the insurance company.
These insurance intermediaries will also advise you on the best insurance company to insure with as they have the knowledge which most likely you do not have. I always point out about those insurance clients whom we once saw knocking on the door of an insurance company whose doors had been closed for good, but were pleading to be let in and purchase a motor insurance cover.
That is the tragedy of not trusting your agent or broker as you might find yourself holding onto a useless piece of paper known as a motor insurance sticker.
Insurance should be made a lifestyle this year and we hope that a positive experience will come out of having yourselves insured.
Washington Ndegea is the Chairman, Bima Intermediaries Association of Kenya (BIAK)
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