Would You Take an Insurance Cover That Pays You When You Lose Your Job?

A Lesson from My Internship Days 

I remember my internship days like it was yesterday. I was fresh out of college, eager to make my mark in the corporate world. My supervisor, Karen, at the time was a seasoned professional, a no-nonsense woman who always seemed to be one step ahead. She was the one who first introduced me to the concept of income protection insurance. 

Back then, it sounded like something only the paranoid would need—a safety net for the overly cautious. At the time, I didn’t think much of it. After all, I was just starting out, living in a bedsitter, and my biggest concern was getting enough fare for a matatu to work every day.

"Life is unpredictable," she said one afternoon as we discussed career plans over a team’s lunch out.
“At your age, you probably think you're invincible,” she added, her eyes flicking over the top of her glasses. “But life doesn’t care about your plans. Get insurance. You’ll thank me later.

Read also: This Smartphone Comes with Free Health Insurance

"You never know when things might take a turn. It's always better to be prepared." She insisted as I nodded, absorbing her advice, though I didn’t fully grasp its importance at the time.

The Turning Point

Fast forward a few years, I landed a reliable job at a well-established company. The salary was decent—Ksh 80,000 per month—enough to live comfortably and save a little on the side. My supervisor’s words echoed in my mind, especially after witnessing the economic havoc the pandemic had wreaked. Companies I thought were invincible were suddenly struggling to stay afloat. That’s when I decided it was time to take her advice seriously.

After researching my options, I chose an income protection insurance package. I had to contribute 4% of my monthly income, which amounted to Ksh 3,200. It seemed like a small price to pay for peace of mind. This cover promised to pay out a percentage of my salary for a specified period if I ever lost my job through no fault of my own. It was reassuring to know that if the worst happened, I wouldn’t be left stranded.

I kept this policy as a quiet backup plan, hoping I’d never need it. Life carried on as usual—until the end of 2023, when the unthinkable happened.

The Unexpected News

The year 2023 had been challenging for many companies, mine included. There were murmurs about financial struggles, but I had convinced myself that things would improve.

On this particular Wednesday morning, I was called into a meeting room by my boss. The moment I walked in, I knew something was wrong. The air was thick with tension, and there was a file on the table with my name on it. I barely heard the words he was saying after "I'm sorry, but..." My mind went blank. I had just received my dismissal letter.

Our company had been struggling for a while, but I never thought it would come to this. The branch I worked at was being shut down, and just like that, I was jobless. As I yanked out the last of the sticky notes I had stuck on my desk before leaving the office, my thoughts were racing.

Read also: Have You Met a Snake Oil Salesman? Here is How to Spot Them

How would I pay my bills? Support my family? Keep up with my Sacco loan repayments? I felt a whirlwind of emotions—shock, fear, and anxiety. The uncertainty was suffocating. As I was holding my breathe so that tears do not fall from my eyes, I remembered the insurance policy. That one decision I had made years ago, almost as an afterthought, was about to be my lifeline.

A Safety Net in Times of Trouble

A few days after I was laid off, I contacted my insurance provider to initiate my claim. The process was surprisingly smooth, especially considering the anxiety I was feeling. Within a few weeks, I started receiving 75% of my salary, about Ksh. 60,000 a month, just as my policy had promised. This income kept me afloat while I searched for a new job.

The relief I felt was immense. The first month without a salary would have otherwise been a nightmare. But instead of spiralling into financial despair, I was able to maintain my routine. I continued to pay my rent, keep up with utility bills, and even managed to send my quarterly contribution to my parents without skipping a beat. My life didn’t grind to a halt simply because I had lost my job. The income protection cover was doing exactly what it was supposed to—protecting my income.

For six months, the insurance cover supported me as I searched for a new job. This financial cushion allowed me to focus on finding the right opportunity rather than rushing into the first available position out of desperation. The stress of job hunting was still there, but it was significantly lessened, knowing that I could manage my expenses.

Understanding Income Protection Insurance

Income protection insurance isn’t just a concept for the paranoid—it’s a practical solution for anyone who values financial security. Here’s how it works:

• Premiums: You pay a small percentage of your monthly income—like my 4%—to the insurance company. This becomes your premium.
• Claiming: If you lose your job through no fault of your own, you can claim a portion of your income, usually between 50% and 75%, for a specified period. This could be six months, a year, or even longer, depending on the policy.
• Waiting Period: There’s often a waiting period before you start receiving payments. In my case, it was a month. This is the time between your job loss and when the payments begin.
• Tax Implications: In Kenya, income protection payouts are usually tax-free, which means you get to keep every shilling.
• Flexibility: You can choose how much of your income you want to protect. Some people opt for a higher percentage, which means higher premiums, while others prefer a lower, more affordable rate.

Read also: Why Foreign Investors Are Putting More Money in Govt Bonds - Report

Wrapping Up

In Kenya, where the job market can be as unpredictable as Nairobi weather, income protection insurance can be a lifesaver. When you lose your job, your bills don’t stop coming, and neither does your need to put food on the table. The pressure can be overwhelming, especially when you have dependents. 

This insurance doesn’t just provide financial support; it gives you peace of mind, allowing you the space to breathe, regroup, and plan your next move without the weight of the world on your shoulders.

Losing my job was tough—no doubt about it. If I hadn’t taken my supervisor’s advice years ago, my story might have been very different. I could have been in a much darker place, possibly even spiraling into debt. I’m grateful for that nudge in the right direction and for the foresight to protect my income.

 Life has a way of throwing curveballs when you least expect them. Losing a job is never easy, but it doesn’t have to be the end of your financial stability. Income protection insurance gave me a second chance to land on my feet, providing invaluable security during a time of great uncertainty. It allowed me to keep my head above water and retain my dignity as I navigated the job market.

Read also: My Brother Missed a Hostel Slot in Nairobi, This Led Me to the Best Investment Decision