Cost of grieving skyrockets as underwriters hike prices
Policy-holders are paying more to grieve their loved ones on funeral insurance costs than they were last year, findings by Business Hub can now reveal.
A random sampling shows that more than 90 per cent if not all, insurance firms offering such indemnities, have almost doubled their prices in recent months as a cushion against the rising cost of living that has been aggravated by “inflationary pressures.”
As a result, the majority of Kenyan households are now opting for slimmed-down rates for such protections with supervisory bodies like the Insurance Regulatory Authority (IRA), who are tasked with controlling such predatory practices, conceding to being powerless in protecting the public interest.
“It is a free market, a blanket market really, where underwriters are open to extending their services and products to willing buyers. These are tough economic times and the industry is feeling the heat as well. But policyholders have options of cheaper insurers,” said an employee of the IRA who requested privacy.
“Last year, I paid Sh6,800 for a group funeral expense insurance in our group where we are 10 of us, today when I got the application form to renew my cover, I was surprised when I noticed the amount had been capped at Sh13,540 for the same cover,” said Kevin Obong’o who is a member of 1940 Brothers.
The group which comprises 10 friends decided to take an annual cover from Liberty Life Kenya.
The deal entails an indemnity that covers the principal member’s nuclear and extended family, one spouse, and up to four biological or adopted children as well as the policy holder’s in-law parents. Such beneficiaries are eligible for up to Sh300,000 in premiums - payable per member.
Also called final expense cover, funeral insurance is a whole life policy that helps cover the costs of an individual’s final arrangements and pays for expenses such as the memorial service, casket or urn, and burial or cremation costs. The idea was to scale down on fundraising from family and friends when one is bereaved and ensure that they go on with their lives even after such an eventuality without running broke.
Benefits offered under this category by the underwriter range between Sh50,000 whose payable annual premium rate is capped at Sh2,325 per member and Sh500,000 for a Sh22,100 rate per member.
“Initially we had intended to change the insurer but instead opted against the idea, after we realised all the other firms had also increased their rates for this particular cover, we had to renew it,” added Obong’o.
For a similar class of business for registered groups, a brochure from UAP Life Group also shows an increase in its yearly renewable rates as Sh 8,125 for benefits of up to Sh250,000 and Sh16,250 for premium benefits of Sh500,000 for nuclear and extended family premium, which is offered as a single claim or per member. Those figures were, however, lower six months ago.
That amount is higher in annual renewals for a similar category, although issued to up to six beneficiaries in claim payments.
Insurance premiums vary depending on your age, the type of coverage, the amount of coverage, your insurance history, and other factors.
When contacted for comment yesterday Association of Kenya Insurers Chief executive Tom Gichuhi said: “Looks like the practice is back in the market. I will need time to study this.”