Frequently Asked Questions

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Frequently Asked Questions

Life Insurance is an agreement between you and Liberty, which provides a pre-determined financial safety net (sum assured) for you or your family at the end of a selected period (policy term) or in case of your premature death during the duration of the agreement.

Insurance can provide you with the means to plan effectively for a secure future. Insurance plans not only cover you in case of death or disability but also enable your assets to grow, which empowers you to meet different financial goals.

Life insurance is something that everyone should have. If you are married and have children, then you certainly need it. There are three main reasons why life insurance is essential: 

(1) It guarantees your earning capacity so that you can continue to support yourself and your family without any financial hardships in the future; 

(2) It helps guarantee the future well-being of your family members, especially if you die suddenly or become disabled; and 

(3) It allows you to rest easy knowing that if something unexpected happens, your loved ones are taken care of financially.

Life insurance experts suggest buying a life insurance policy that is 10 to 20 times your annual salary. Still, the size of your life insurance needs depends on many factors, including how much your family will need to cover final expenses (last respects) and current and future financial obligations, such as mortgages and college tuition.

Several factors determine the amount payable (premium) for your insurance policy: 

  • the type of policy you choose,
  • the term length (amount of time over which your policy will be in effect)
  • the sum insured (amount to be paid out)
  • your age at the time you apply for coverage, and
  • your risk exposure (nature of your work) 

For example, a 20-year-old male who drives for a living will pay more for insurance than his 40-year-old neighbour—a housewife. The first man spends more time on the road daily, thus representing a higher risk to an insurer.

The primary need for life insurance is to provide financial security for your family. Other aspects that insurance helps fulfil are:

  • As a tool of financial planning 
  • Collateral security for loans
  • Savings
  • For your medical needs and that of your family

One of the simplest rules is to assume that insurance is a replacement for your lost earning capacity. Calculate your total income for the years that you expect to work, and the amount realized gives an indicator to the amount of life insurance you deserve to carry

A simple rule of thumb is to assume that insurance is a replacement for your lost earning capacity. If you plan to work for 40 years and your annual income is Ksh.1 million (not accounting for inflation), then the amount realized shows that you deserve to carry Ksh. 40 million in life insurance.

What is term insurance? 

Term insurance is a simple and affordable way to protect your family’s financial security. In the event of your premature death, your beneficiaries will receive an amount (sum assured) from Liberty. Term life insurance has no savings component, and the premiums you pay are purely a cost to buy the life cover.  

Term insurance is suitable for you if:

  • You are looking for a low-cost life cover without any savings benefits attached
  • You are at a stage where insurance coverage is vital, but you cannot afford high premium payments due to low income

An endowment policy is a combination of savings and life insurance. You pay premiums during the term of the policy, and in the event of your death during that period, your beneficiaries will receive the sum insured and accumulated bonuses. However, if you outlive the policy term and do not die before, you will receive the sum insured and any accrued dividends.

An endowment policy is suitable if you want to accumulate capital for anticipated financial needs like buying an asset such as a home, providing for your old age, your children’s education, marriage, etc.

Yes. Just as you may borrow money against a specific asset, your life insurance policy could be used to secure a loan from banks or other financial institutions. In the unfortunate event of your death, we will repay the loan from the proceeds of your life insurance policy.

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