Why Group Life Insurance is Essential for Small Businesses in Kenya

Running a small business in Kenya comes with many challenges—from managing cash flow to retaining skilled employees. While Group Life Insurance is not mandatory under Kenyan labour law, many SMEs now offer it as part of employee benefits, especially in professional services, manufacturing, NGOs, and growing startups. Employers use it to attract talent, build loyalty, and provide basic financial security to staff families. At Step By Step Insurance Agency, we help businesses structure Group Life Insurance correctly—so both employers and employees clearly understand what is covered.

What Is Group Life Insurance?

Group Life Insurance is a life insurance policy taken by an employer to cover employees under one policy. If an employee dies while still employed and listed on the policy, their beneficiaries receive a lump-sum payment (death benefit). Cover is directly tied to employment status—once an employee exits the company, their cover stops. This makes Group Life Insurance a workplace benefit rather than personal life insurance.

Premiums in Kenya

In Kenya, Group Life Insurance premiums are mostly paid by the employer as part of staff benefits. In some cases, employers may agree with staff to share the cost, depending on internal company policy—but employee contribution is not the norm.

Who Needs Group Life Insurance?

How Group Life Insurance Works in Kenya

When a business enrolls, eligible employees are covered under one policy. The benefit is usually linked to salary—for example, two or three times annual pay.

Key Policy Conditions Employers Should Know

These are common causes of claim disputes in Kenya:

• Cover applies only while the employee is actively at work
• New employees may wait for a short period before cover starts
• Suicide is usually not covered in the first policy year
• Cover stops immediately when employment ends

Understanding these conditions upfront prevents misunderstandings later.

Tax Treatment

Group Life Insurance premiums are generally allowed as a business expense for tax purposes, subject to KRA rules and proper record-keeping. Always ensure documentation is maintained to support deductibility.

Why Group Life Insurance Makes Sense for Small Businesses

Offering Group Life Insurance shows responsibility toward employee welfare and strengthens trust within teams. Many Kenyan businesses also include it in their Employee Value Proposition (EVP) to stand out in competitive hiring markets—while still managing costs.

Group Life Insurance Claims Process in Kenya

If a covered employee passes away:

1. The employer notifies the insurer (claims should be reported within the policy timeline—usually within 30 days).
2. Required documents are submitted:
   • Completed claim form
   • Death certificate
   • IDs of deceased and beneficiary
   • Employer confirmation that the employee was covered at time of death
   • Medical report where applicable
3. The insurer verifies details and may request additional information.
4. Once approved, the payout is released to beneficiaries—typically as a lump sum.

Employer confirmation of active employment is essential for claims to proceed.

Challenges Facing Group Life Insurance in Kenya

Easy Enrollment with Step By Step Insurance Agency

At Step By Step, we work with multiple underwriters to simplify enrollment—from selecting the right policy to onboarding employees—ensuring your business gets practical, compliant coverage.

Conclusion

Group Life Insurance does not replace personal life insurance. It simply provides employees with basic financial protection while helping employers build trust, stability, and stronger teams. In Kenya’s evolving business environment, this cover offers a balanced way to support staff welfare without overwhelming company budgets.

GET QUOTE