Personal accident policy is a good enough disability cover
In your article last week about disability insurance, you mentioned that the local offering, personal accident insurance, is rather truncated compared to the US version.
Since our insurance practice is a British legacy, am I right to assume that the local industry has also accident and sickness insurance, and perhaps permanent health insurance, similar to what they have in the UK? If so, which companies offer the same?
— Watson M.K, Nairobi
Watson I wish I could be as definite as to say that we have products similar to those in the UK to cover the wider form of disability and on a long-term basis. But we have no equivalent locally, though, truly, our insurance model is a replica of the British system.
Our major drawback is lack of reliable statistics on morbidity and accident rates. Moreover, many insurers are unwilling to commit because of uncertainty concerning building critical mass for at least break-even purpose. The good news is that there are some underwriters who are intrepid warriors, who do not go by the standards of others and are already breaking out into the wide blue ocean.
Those fearless souls who know the price of independent thought and who are willing to pay it are offering insurance for diverse risks as they think ‘out of the box’.
Undoubtedly, you bet some of them will be offering the wider form of disability insurance probably very soon.
Market forces could propel insurers into improving the current offering. Once the insuring public perceive the need for income replacement insurance, thereby, making insurers assured of the likelihood of large numbers of insureds, this will happen. The problem is that few of us recognise the threat to our standards of living posed by the inability to earn an income due to accident or illness, but the statistics, if available, would be alarming.
Disabled
A survey in the UK sometime back revealed that one in five of Britons would be off work for three months through disability at some point in their career. A 40-year-old man was six times more likely to be permanently disabled.
This is in the UK, mind you; just consider what the situation is in Kenya with our escalating rate of road accidents and illnesses. If the arguments to support buying life insurance are convincing, the arguments in favour of an income replacement policy are perhaps even more compelling. Therefore, it should take little persuasion for all of us to see the need to take up income replacement insurance, even if it is the personal accident cover that is readily available: after all, half a loaf is better than none.
The ‘accidents’ only policy (as the personal accident insurance is sometimes called) pays benefits defined in the contract following accidental bodily injury. No cover is provided for death or disablement on account of illness or disease. The policy is normally renewable annually and one’s occupation is a major rating factor.
Cover is available for both individuals and on a group basis, especially group personal accident for employees. Note, however, that clubs and other affinity groups can also purchase this insurance for their members. Group cover comes cheaper than cover for an individual since the scheme can often negotiate favourable terms with insurance companies on behalf of their members.
However, customising the product to suit individual circumstances may not be possible and a person with special needs would need to arrange some own cover.
So, in a word, we are some way from replicating the UK products offering, but the personal accident insurance available covers one of our specific needs.
For questions on any aspect of insurance write to [email protected]
