BY BETT KINYATTI
My pal, Vicky, doesn’t believe in insurance. I asked her why and she said, “Insurance companies are a rip off. Especially the life policies.”
I don’t think insurance companies are a rip off, Vicky. I don’t even think Kenyans have taken out enough insurance. The reason why there’s always a huffing and puffing insurance salesman knocking at your door or annoyingly leaving you several missed calls, is because we haven’t taken out enough insurance as Kenyans.
The golden rule of thumb is, you can never have enough insurance.
Here’s a story. In December 2008 I took out two insurance policies with Sanlam. They called themselves back then Pan Africa Life. One policy was a life cover and the other a savings plan.
The life cover would kick in if I got into an accident that made me unable to make my bacon. Or something like that, I’m not quite certain. The premiums for it were about 820 bob per month. It’d be adjusted annually for inflation. It made sense to have it. A grown up thing to do. This is what adulting looked like.
The savings plan was… just that, a plan to save your money monthly with an insurance company. What I liked about it was its flexibility – at anytime during the life of the policy, I could ‘flex’ my premiums either upwards or downwards, depending on which direction the wind of my life was blowing.
What really sealed the deal for me, though, was the insurance salesman. His salesmanship was a gift from the gods. Words rolled off his tongue as if they’d lined up in the back of his mouth and were bringing themselves forth as if on cue. He was so suave he could use them to lace up a bow on a box and present the box to you.
I remember he said something to the effect of, “If you start saving 4,000 bob a month now, that’s about 130 bob a day. 130 is what you spend on lunch. Plus, plus” he paused for effect, “you’ll also get a cash payout from both policies after five years.”
I signed up right away.
I was 24, single, freshly employed as an auditor, living at home and had the juvenile gift of blowing money on useless things. I’m in my 30s now and when I think back to all that money I blew on shoes and Smirnoff Ice and vodka, I wish I’d have that money in my pocket right now.
Folk are constantly asking about that one regret you have from your 20s. My regret is, I wish I’d travelled more and been in the outdoor more. And when I say travel I don’t mean to New York or Cape Town or Zanzibar. No no, around Kenya. Laikipia and Watamu, Mandera and Kisumu. I’ve not seen much of my own country and it’s such a pity. It’s because I was getting wasted on Smirnoff from my 20s.
But then again… hang on. Folk who saved more in their 20s say they wished they’d travelled and let loose more instead, and those who let loose say they wished they’d saved more. Nobody gets it right in their 20s. Even if they did get whatever they got right. So no, I have no regrets. I take my regret back. I will travel when I will.
Anyway, I saved consistently from that December of 2008. I’d set up a direct debit instruction with my bank, the cash left my account on the 10th of every month.
I was in corporate back then so every year we were promoted and our salos increased by a significant percentage. Plus there was bonus sometimes. Not every year, but some years. After our promotions, I’d ‘flex’ my premiums upwards.
I left corporate to freelance as a creative writer in April 2013. I was saving by this time 9gees per month, the equivalent of 300 bob on lunch every day. That’s a healthy lunch with healthy portions in a healthy eatery. I knew I wouldn’t make a sustainable income from my writing for at least one more year, plus I was living off my cash savings, so I ‘flexed’ by premiums downwards to 2gees, the minimum allowed for the policy. Two gees per month is the equivalent of a skinny unhealthy lunch.
Life carried on in this languid rhythm. I continued saving while writing.
In 2014, I got a cash payout of 35 gees from the policies. I remember I was so broke in that year, that when the cash came I immediately withdrew it and stashed it in a dark corner of my wardrobe. In a brown envelope. Then I told no one about it. I startled each time my phone rang, thinking it was the bank calling to tell me there’d been a mistake and they wanted their money back. Nobody called, though, because there had been no mistake. The money was mine. All mine.
I didn’t know it then but insurance had come through for me.
I was heavy with our first child in 2015. Our darling, Muna. I took out an education policy for this yet-to-be-born child and a pension policy for myself. (I say ‘child’ because I didn’t know if the baby was a boy or girl. We had decided not to check the gender of the baby, we would know what it were when it were born.)
I don’t know what informed my decisions to take out these two policies given that my pregnant head felt like it was stuffed with cotton balls. My mind was like mabati. I wasn’t thinking like a regular person. Let alone a person who could make seemingly wise decisions.
Two policies at once, though, was two policies too many. I knew I’d bitten off more than I could chew, but I buried my head in the sand and went on my maternity leave.
A year later, I was at the insurance company’s office on Kenyatta Avenue reviewing the statuses of my four policies. It was June 2016 – I was 31, a writer and new mum, I had taken his last name and had the supernatural maternal ability of running a household on even the most meagre of budgets.
The chap at the customer service desk gave me my statements. I couldn’t believe it: In the eight years since I’d signed up for the savings plan, my savings had grown to a little over 500,000gees. He told me, “If you chose to,“ he leaned in heavily on the ‘if’, “you can terminate the policy and the cash will be sent to your bank account within three business days.”
I almost fell off my seat. Yaani I’d been sitting on half a mil and I didn’t even know about it? The way I was broke? And I mean, this was lunch money I’d been saving. Lunch!
I said to the customer service chap, “I want to terminate the policy right away.”
He almost fell off his seat. “Why?! This was a really good product and they don’t sell it anymore.”
“Because…” I sighed. “Because the policy has done what it needed to do. This was its purpose, to sort me out when I needed it to. Of course I didn’t know this when I signed up but…” I shrugged my shoulders. “Now it has.”
I took out yet another education policy for my yet-to-be-conceived second child. Then I terminated this savings plan and redirected the cash to an investment project. The returns from this project settles the premiums for my four insurance policies.
And guess what? I’m not yet done. I will take out more insurance. Insurance will be the silhouettes of my financial horizon.
To Vicky and to you who’s reading this, insurance exists because life happens: you could lose your primary source of income, your kids will need to go to school, you could decide to return to school, you will retire, you will die, you could get into a bad run that turns you into a cabbage (touch wood), you could decide to pursue your hobby in urban fashion or hand-making neck jewellery as a business, or backpack through West Africa for a year…
Look, a lot will – and could – happen tomorrow or next week or in ten years, I’m not certain. What I’m certain of is, you’ll immediately need a boatload of money. Insurance is one of the sure ways to have that money in your hands, before the need arises.
Just think of how much you spend on your lunch every day.
An edited version of this story first ran in the Personal Finance column of Saturday Nation Magazine.
Also, the little girl in the picture has nothing to do with the story, but how gorgeous is she? TIA! I got her from Unsplash. I’m even crediting the photographer so you can check out more of his work: Trevor Cole on Unsplash5
Love how you turn your experiences into stories. I too have surrendered from life policies and pension to settle obligations. The additional benefit in tax relief is a plus for those salaried.
Thanks, Lilian! I realized it’s easier for me to make sense of things when it’s told in a story. It’s probably the African in me.
Three stones, fireplaces, anyone? Hehhee.
Ah yes, there’s that tax relief. Taking back from the government of Kenya. Tell me, is the relief only on PAYE (for the salo’d folk) or also on WHT (for us freelancers and, uhm, consultants? Ahem)?
Kudos GB’s second in command. Your stories inspire me a lot! Keep me posted whenever its published especially matters finance.
Andati! Thanks and thanks, man! (Cool name, by the way.)
So I have this column on Daily Nation online called Money Talks. Runs Mondays.
Hapo now I go HAM with these personal finance stories. I’m actually having a good time writing them. Who’dathought?
Make sure to subscribe.
PS. The Nation website is knotted up like spaghetti. All the best unknotting it.
Hello Bett. Will definitely subscribe to get more financial insights from you. Its my area of interest.
Light bulb moment, thanks for the insight!
Something else https://bit.ly/32o1I3B
Thanks for the read, Muindi!
Let me read yours as well. (Scratch mine I scratch yours? Hahaa)