The adequacy of life assurance in kenya
Angima, Caren M.B
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This exploratory research's main objective was to investigate into the extent to which the life policies which Kenyans have purchased are adequate to meet the needs for which they are intended. The primary information for the research was collected by use of questionnaires and a number of personal interviews. This information was sought from a sample of 200 life policyholders, of whom only 75 responded and from executives of 10 insurance companies, of whom only 8 responded. These 10 companies included those currently underwriting individual life business in Kenya. The findings show that all policyholders have their basic needs as food, shelter, clothing, house operations and personal and miscellaneous expenses. Other expenses include school fees, repayment of loans, caring for relatives, contributions to 'harambee' and charity and various sorts of entertainment. The findings also show that most policyholders have assured for the figure of Kshs 100,000 and Kshs 20,000. and this is just because the figures look convenient and attractive. Considering the extent to which they are covered, findings show that there is underinsurance in the area of life. On the average, people have assured for only about half of their needs. The factors which influence the amount of life cover that one purchases were found to be income and age. A person's income will determine the extent to which he/she can afford premiums hence the size of the policy. Age influences sum assured in that it is related to the marital status of a person and size of needs and obligations he/she has to meet. Findings also show that people do not purchase life cover based on an analysis of their needs and this is due to limited incomes as o well as conservatism on their part. Marital status and sex of an individual were found to be of no influence in determining the sum assured. Finally, the findings suggest that the problem of under-insurance could be due to the fact that insurers du not play their expected role of assisting clients match their needs with the sum assured. Recommendation to correct the problem (under-insurance) include a campaign by the insurance industry, to encourage people to purchase life cover earlier in life when they do not have many obligations and can afford premium payment, an encouragement to purchase other types of policies and not only endowment, as well as a more spirited effort on their part to train and supervise their agents to do a more commendable job of assisting clients do a simple needs-income analysis and hence match sums assured to needs.