Family . Health . Wealth

Category: Your Money

Top 5 Questions to ask before taking a Savings Plan with an Insurance company.

We all want to have the extra money to buy what we want, when we want it. Sometimes this may not be possible due to irregular flow of income or other financial challenges.  Whether Wealthy, rich or broke we all desire to have more and more of money each day. Why have less? Why have just enough? Why not have it all? 

We want to achieve our financial goals without breaking our backs or getting restless overthinking about money, thinking of how much we want more of it right now or in the near future. Also, we want to save the extra buck in our wallet to ensure we buy the things we want, make meaningful investments and save for the rainy day. And for those who have more money right now, no one wants to be labelled the famous prodigal son who squandered all his money and ate with pigs. The more the savings plan you have the more the merrier!

There are many savings plans available in Kenya and insurance Savings Plan is one of them. Below are top 5 questions to ask yourself before taking one.

What is my financial goal?

It is important to list all your financial goals in order of priority. Do you want money for your kids’ education, buy property, save for retirement or just accumulate the money then decide what to do with it afterwards?

When would I like to achieve your financial goals?

The best financial goals have a timeline. Remember S.M.A.R.T goals? This will help you achieve them faster by getting committed and keeping yourself in check.

What is the rate of return?

A savings plan is not a get rich quick scheme strategy, the essence is to help you put money aside and for your future. Interestingly, insurance companies offer returns on your savings which keep on increasing with the period of the savings plan. In Kenya, some companies offer up to 50% return on savings for plans over 10 years.

What additional benefits am I looking for?

Insurance companies tend to offer additional benefits such as Life coverage, waiver of premiums in case of death or disability due to accident or critical illness. This means that you immediately stop contributing while your savings plan continue to accumulate. This will guarantee 100% payment of the maturity amount. For example, if you were saving towards 5M and you became incapacitated due to accident or critical illness or worse passed on,  you or your beneficiaries would receive the full maturity amount even if you had made only 1 contribution (As per terms and conditions of your contract)

Which is the best insurance company?

When considering the best insurance company in Kenya, ensure it is of good reputation, their leaders are of good repute, they have enough experience working in the market and offer good service. Most importantly find out what people are saying about them online.

It is important to note that your accumulated funds would not be subjected to taxation.  Remember to work with an experienced Financial Consultant who will help you with all your Saving Plans questions and guide you through the process.

Should I invest money in a Money Market Fund (MMF)?

I receive this question from my clients every other day and am glad to discuss MMF today. We shall see its importance and superiority compared to other forms of investment. By the time you finish reading today, your eyes will be wide open and you’ll know what to expect. There are no shortcuts to getting rich, it’s all about consistency, understanding products available in the market, working with a great investment expert, and having clear financial goals so that you are able to focus on investments that match your financial plans.

Due to the rising instability in the economy like the COVID-19 Pandemic and political uncertainty, most investors are focusing on investments that provide preservation of their capital, such as fixed bank deposits, low-risk bonds, SACCOS, Plots, or Money Market Funds. These provide safety for their investments in comparison to the fluctuating securities markets and provide a potential stable rate of return.

So what is a Money Market Fund? It is a form of Unit Trust Investments whose aim is to deliver interest beyond the existing inflation rates.

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