What types of life insurance are sold in Zambia?

Term life insurance

Term life pays the sum assured only if the life assured dies within a fixed term, such as 10 or 20 years. Nothing is paid if they survive the term. Because there is no savings element, it offers the most cover per kwacha of premium. It suits people with dependants, a mortgage or school fees to protect during a specific period. See the term life product page.

Whole life insurance

Whole life covers the life assured for their entire lifetime, as long as premiums are paid. Because a claim is certain eventually, premiums are higher than term life, and the policy usually builds a cash value that can be borrowed against or taken as a surrender value. It suits people who want guaranteed cover for estate or legacy purposes.

Endowment policies

An endowment combines life cover with saving. It pays the sum assured on death during the term, and pays a maturity benefit if the life assured survives to the end of the term. Some endowments add bonuses declared by the insurer. It suits people saving for a known future need, such as a child's education, who also want protection along the way.

Unit-linked policies

Unit-linked policies invest part of each premium in funds, and the policy value moves with the unit price of those funds. The life cover component is usually a fixed sum assured or the fund value, whichever is higher. They suit people comfortable with investment risk who want flexibility in fund choice. They are more complex to administer and to explain to customers.

Annuities

An annuity is the reverse of most life products: the customer pays a lump sum or a series of premiums, and the insurer pays a regular income for life or for a fixed period. Annuities are used to convert retirement savings into income and are often bought with pension benefits. They suit retirees who want certainty of income.

Funeral cover

Funeral policies pay a fixed, usually modest, benefit quickly after death to cover funeral costs. They typically cover the policyholder and named family members, are sold with simplified underwriting and a short waiting period, and are distributed widely through agents, employers, churches and mobile channels. They suit almost every household and are the most common entry point to insurance in Zambia.

Group life and credit life

Group life covers a defined group, usually the employees of one employer, under a single master policy. The employer pays the premium and benefits are often set as a multiple of salary. It suits employers who want to offer a death-in-service benefit without underwriting each employee.

Credit life pays off an outstanding loan balance if the borrower dies or becomes disabled. Lenders often require it as a condition of lending. It protects both the borrower's family and the lender.

Choosing between them

A useful way to choose is to ask three questions. Is the main need protection, saving, or income? For how long? And how much can be paid each month? Term and funeral cover answer a protection need cheaply. Endowment and unit-linked policies add saving. Annuities provide income. Whole life provides permanent protection with a cash value. Many households end up with a funeral policy plus one other product.

How Ontech LifeI ERP handles this

Ontech LifeI ERP administers all of these product lines in one policy system, with the events each needs, from surrender values and paid-up values to annuity payments and group member schedules. See the life insurance products overview.