Life Insurance, also known as Life Assurance, is a type of insurance policy that provides a monetary benefit (the sum assured) to a named beneficiary upon the demise of the life that has been insured. The policy may be for a specified duration or the entire life of the person insured by the policy.
Type of Life Insurance Policies

There are three main types of ordinary life insurance policies:
Endowment Life

These are undoubtedly the most common life insurance policies in Kenya. Endowment policies are for a fixed term e.g. 20 years. Most endowment policies payout partial maturities at regular intervals and a final maturity upon the expiry of the policy term to the insured. In the event of the demise of the insured before the expiry of the policy term, the named beneficiary gets paid the sum assured. Endowment policies accrue bonuses and have a surrender value after three years of premium payment. The example of an endowment life policy in Kenya is an Education Policy.

Whole Life

Whole life insurance policies in Kenyan are usually up to a certain age e.g Whole Life to age 65 or alternatively, the client pays the premium for a fixed number of years and is then covered for the rest of their lives. The sum assured plus any accrued bonuses are paid to the beneficiary upon the demise of the insured person. Endowment policies accrue bonuses and have a surrender value after three years of premium payment.

Term Life

Term life policies are pure life policies with no bonuses, surrender value or maturity payments. They offer a straight death benefit upon the demise of the life assured. The best example of term life policies in Kenya is credit life policies which pay the loan balance in the event a bank or mortgage customer passes away. The premium payment for credit life policies is usually bundled into the loan repayment amount.

Supplementary Coverage/Riders

Life insurance policies are often sold with supplementary coverage. Some of the most common types of supplementary coverage include:

Accidental Death Rider – Additional coverage that pays an additional amount, typically 150 – 200% of the sum assured, upon the demise of the insured person through accidental death (as opposed to natural causes).
Critical Illness Rider – An additional sum, typically a stated percentage of the sum assured, paid to the insured person upon diagnosis of a critical illness specified in the policy.
Permanent and Total Disability Rider – Additional coverage that pays an additional amount, typically 150 – 200% of the sum assured, upon the permanent and total disability of the insured person.
Waiver of Premium Rider – A feature of the policy that waives future premium payments upon the occurrence of a named event e.g permanent and total disability.