After the recession, many banks and insurance companies have become more careful and many have reduced the amount of interest they offer to their clients. Although the American banks and insurance companies were the worst culprits, seems the German companies are the ones becoming even more careful.
Allianz which is one of the biggest insurance companies in Germany recently revealed a new life insurance offer that takes away the guaranteed interest rate that was so common with many life insurance policies. Ergo, another company has also revealed a new policy along the same lines. The new policy only guarantees the client of receiving back the amount they contributed, with no assurance they will get the interest the money might earn during the contribution period.
This new method might see the end of life insurance as we know them. Some experts advice that this new policy might just be worse than you saving the money yourself in a fixed account. Most fixed accounts offer an interest rate of 0.75% to 1.25% while the new insurance policy runs on 0.3%.
The insurance companies have advised though that for extra pay, the client will have the chance to hop on a policy that offers a guaranteed interest rate. But whether this would be worth the extra cash is up for debate. Last year most life insurances were at 1.75%. Before 2000, most policies would return atleast 4%.
At this rate, I think the only safe insurance is investing back home. If treasury bonds are giving back between 10-22% while most shares can earn between 50-200% over a 15yr period and real estate gains about 5-10% annually. I think the solution for most Kenyans is evident. Your money is safer at home….
Check out other investment ideas other than real estate in Kenya, you might need it.
So how many of you have a life insurance? Do you think people should get one? Anyone tried to get one from a Kenyan insurance company, how are the rates? Looking forward to reading your views.