INSURANCE
A lot of people have misunderstood insurance and its place in the business space and this is a journey that will hopefully demystify and set straight what people need to know about insurance, it’s role and importance.
We will first start with definitions and terms used in the insurance space.
DEFINITION AND TERMS
INSURANCE
Insurance in a nutshell is transferring unknown risk from yourself to an organization or a company. The organization or company which accepts the unknown risk is what we know as an Insurance company.
The term unknown risk means one is unaware of the risk. This is the reason when someone has a pre-existing or a chronic condition the cover is not to the full limit of your medical cover but to a sublimit. This means the insurance will cover one for medical to the full limit if the condition is unknown and not chronic.
PREMIUM
The Insurance company charges a fee to be able to cover the insured from losses. The fee charged is the cost of insurance and is known as premium.
SUM INSURED (S.I)
The term sum insured refers to the value of insurance purchased. The premium charged is often percentage of the Sum Insured in property insurance. However not all premiums are calculated as a percentage of the sum insured. In health and life insurance the age of the insured determines the premium.
INSURANCE POLICIES
Insurance policies are the products offered by insurance companies. Different products exist in Insurance and we will look at the products one at a time.
WORK INJURY BENEFIT ACT (WIBA)
WIBA insurance covers employees of the insured against injury in the course of duty and occupational diseases. This is a mandatory Insurance required by law for all businesses to cover themselves against Injury caused to employees while on duty.
WIBA cover has four components:
Death Benefit. – This benefit goes to the next of kin and not to the insured. The next of kin of the employee is compensated in case the employee dies in the course of duty.
Total Permanent Disablement (TPD) – This covers loss of any part of the body from Injury while working. There’s a scale used to assess the extent of the disability, to arrive at the compensation amount. The maximum payable is calculated to be equal to 96 months’ earnings.
Temporary disablement – This covers the employer for the days the employee is away from work as a result of occupational injury. This means the employer pays the employee the salary that is claimed from the WIBA cover. The maximum compensation period is 104 weeks or 2 years.
Medical Expenses – This section pays for the medical expenses incurred by the employee as a result of injury from work.
DOCUMENTS REQUIRED
For Quotation we require the staff salaries and Job description. Documents to commence cover are company’s registration certificate and company KRA Pin.
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