How does life insurance work in Zambia?

The parties in a life insurance contract

Every life policy involves a few distinct roles. The policyholder owns the contract and pays the premiums. The life assured is the person whose life is covered; this is usually the policyholder but can be someone else, such as a spouse. The beneficiary is the person or organisation who receives the benefit when a claim is paid.

The insurer is the licensed long-term insurance company that carries the risk. An agent or broker may sit between the policyholder and the insurer, but the contract itself is always with the insurer.

Premiums and the sum assured

The premium is the amount the policyholder pays, usually monthly or annually, to keep the cover in force. The sum assured is the amount the insurer promises to pay on a valid claim. Premiums are set by the insurer based on the sum assured, the age and health of the life assured, the policy term, and the type of product.

If premiums stop, the policy may lapse after a grace period. Some products with a savings element can instead become paid-up for a reduced benefit or be surrendered for a cash value. The exact rules are in the policy document and differ between insurers and products.

Applying for cover and underwriting

An application usually asks for personal details, the desired sum assured, beneficiary details, and a declaration about health, occupation and lifestyle. The insurer's underwriting team reviews this to decide whether to accept the risk, at what premium, and with what exclusions. Small sums, such as funeral cover, are often accepted with simplified or no medical questions. Larger sums may require a medical examination.

Once accepted, the insurer issues a policy document. The policyholder should keep it safe and tell beneficiaries where it is, because it will be needed at claim time.

Types of cover available

Zambian insurers sell term life, whole life, endowment, unit-linked, annuity, funeral and group life products. Each answers a different need: pure protection for a fixed period, lifetime cover, saving toward a goal, retirement income, or cover for a whole workforce. Our guide to the types of life insurance in Zambia explains each in detail.

Paying premiums

Premiums can be paid by payroll deduction, bank debit order or transfer, cash through an agent, or Mobile Money. For many policyholders, Mobile Money through MTN Mobile Money, Airtel Money or Zamtel Kwacha is the most convenient option because it does not need a bank account or a visit to a branch. Read more in our guide to insurance premium collection in Zambia.

What happens when a claim is made

When the life assured dies, or a maturity or disability event occurs, the beneficiary or policyholder notifies the insurer, completes a claim form, and provides supporting documents such as a death certificate and identification. The insurer checks that the policy was in force, that the event is covered, and that the documents are genuine, then pays the benefit. Our guide on how insurance claims work in Zambia walks through the process.

Who regulates life insurance in Zambia

The Pensions and Insurance Authority licenses and supervises insurers, brokers and agents under the Insurance Act No. 38 of 2021. The Act separates long-term (life) insurance from general insurance, requires insurers to file periodic returns, and provides for policyholder protection and complaints handling. If a policyholder cannot resolve a dispute with the insurer, the matter can be escalated to the regulator. Personal data collected by insurers is governed by the Data Protection Act No. 3 of 2021.

How Ontech LifeI ERP handles this

Ontech LifeI ERP, developed by Ontech Solutions in Lusaka, is the system a life insurer uses to run this whole cycle: policy administration, underwriting, Mobile Money premium collection, claims and PIA reporting in one platform.