What is Life Insurance and How Does It Work in Kenya?

Life insurance is one of the most important financial protections you can have, especially if you have dependents who rely on your income. Yet in Kenya, many people only hear about life insurance but are not sure how it actually works or why it matters.

This guide explains life insurance in a simple and clear way to help you make informed decisions for yourself and your family.

What is Life Insurance?

Life insurance is a financial agreement where you pay a small amount of money (called premiums) to an insurance company, and in return, they promise to pay your family or chosen beneficiary a lump sum of money if you pass away.

This payment is called a death benefit. It ensures that your loved ones are financially protected even when you are no longer there to support them.

Why Life Insurance Matters

If anything happens to you, your family could face financial challenges such as:

• Rent or mortgage payments
• School fees
• Daily living expenses
• Medical or funeral costs
• Outstanding debts

Life insurance ensures they don’t struggle or fall into debt during a difficult time.

Types of Life Insurance in Kenya

There are two main types of life insurance you should know:

1. Term Life Insurance

This type provides coverage for a specific period, for example 5, 10, 15 or 20 years. If you pass away during that period, your beneficiaries are paid. It is usually 'more affordable' and works best for parents and young professionals. For some term life insurance policies, your premiums are refunded and for some they are not . Endowment policies also fall under term life insurance policies.

2. Whole Life Insurance

This type covers you for your 'entire lifetime'. You pay premiums for a period of time, can be 10, 15 or 20 years but get covered for the entirety of your life. This is the best legacy planning tool for parents who would want to leave an inheritance for their beneficiaries. It can be more expensive than term life sometimes but unlike term life, the cover does not cease once the period of payment has lapsed.

How Are Premiums Calculated?

The amount you pay for life insurance depends on several factors:

• Your age
• Your health and medical history
• The amount of coverage you want
• How long you want the policy to run
• Sometimes premiums may differ between smokers and non-smokers.

Tip: The younger and healthier you are when you start, the cheaper it is.

What About Benefits Like Critical Illness Cover?

You can add extra protection called “riders” to your life insurance, such as:

• Critical Illness Cover – Pays you if you are diagnosed with a serious illness such as cancer, heart attacks or stroke.
• Disability Cover – Pays you if you become permanently disabled and cannot work or sometimes partially disabled (for this a percentage is paid).
• Income Protection – Replaces your salary if you lose your ability to earn.

These make your policy more comprehensive and tailored to your needs.

How to Know How Much Life Cover You Need

A simple and helpful formula is:

Life Cover Needed = (Yearly Expenses × 10) + Outstanding Debts

This ensures your family maintains their lifestyle and clears any debts.

Is Life Insurance Worth It?

Yes, especially if you have dependents. It is one of the most affordable and powerful ways to ensure your family’s financial security.

Ready to Protect Your Family’s Future?

At Laren Insurance Agency, we help you compare different life insurance plans from top insurance providers in Kenya and guide you to the one that fits your budget and goals.

Need help choosing the right life cover?
Speak with a licensed insurance advisor today.

Request a Life Insurance Quote