Britam Akiba Savings Plan is a life insurance savings plan. It is an endowment policy with profits, but guaranteed profits and that is the strength of this cash value life insurance.
Besides a savings plan, it also includes life protection. Your savings contributions plus the savings returns are guaranteed regardless of the turn your life takes.
The plan’s model is a systematic forced savings with a guaranteed lump sum payout at maturity (end of the policy term), protected against life’s uncertainties via built-in premium waivers.
Akiba Savings Plan At A Glance
- Policy Term: 5 to 12 years.
- Minimum Premium: KES 3,000
- Entry Age: 18 to 65 years (Maximum age at cover end: 70 years).
- Target Needs: Business capital, deposit for property/mortgage, education fund, retirement package, milestone projects, or medium-term asset build-up.
If you want to achieve and guarantee medium to long-term financial goals, this should be your plan. Its basic foundation is to offer solutions to the three challenges of life that we face; educating your children, building a house, and saving for retirement so that you can live in financial freedom.
Britam Akiba offers substantial savings returns of up to 7% net taxes and management fee. In short, it offers money market returns with a steady guaranteed rate (although your age is a big determinant). The payout is quite generous given that some portion of the premium contributions you make goes to life protection to lock your dreams and a free built-in premium waiver if the policy holder passes away.
Again, it does not require you to put astronomical amounts at once like in the money market, but in forced bits that make you realise your financial goals. To get the maximum returns, aim for a policy term of 10 to 12 years.
The alternative of Akiba Savings Plan is anticipated endowment policies or simply money back policies.
In the next segments, I shall focus on Akiba savings plan architecture including underwriting options, features and benefits, policy liquidity, flexibility, and non-forfeiture clauses, and who it is for.
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Underwriting Options: Medical vs Non-Medical
When you enroll in Britam Akiba Plan, the maturity payout you intend to get will determine whether you will be subjected to medical checkup or not.
- Without Medicals (Simplified Issue)
If the maturity payout (Sum Assured) you will receive at the end of the policy term is equal or below KES 15,000,000, you will not be subjected to a medical checkup. You will not visit the doctor.
When non-medical underwriting takes place, your life protection or death cover will have a waiting period of 1 year. This means that if the policyholder dies from natural causes within the first year of the policy, the death benefit will not be paid to the nominated beneficiary.
However, if the death is as a result of an accident, a death benefit will be paid to the nominated beneficiary to cushion your family.
- With Medicals
If the maturity payout is beyond KES 15,000,000, you will be subjected to a medical checkup.
The benefit of being subjected to a medical checkup is that your life protection cover will begin immediately without waiting.
You will enjoy a full cover from day 1. In case the policy holder dies future premiums will be waived and the maturity benefit will be paid when due. You can also add death cover as a rider so that in case of death your family receives 2 payouts, immediately and at the end of the policy term besides premium waiver.
We shall discuss adding life protection to your Britam Akiba Savings Plan in both underwriting options in a few seconds.
Britam Akiba Savings Plan Key Features and Benefits
- Guaranteed Maturity Benefits: Akiba pay a guaranteed maturity payout. This amount constitutes your premium contributions and a mark-up of up to 7%. The savings returns are quite generous considering some part of the premiums you pay go to life protection so that your milestone financial goals are fulfilled whether you are there or not.
- Free Built-in Waiver of Premium: If the policyholder dies within the policy term, future premiums are waived and the policy stays active until maturity. The maturity payout is paid to the nominated family member.
- Optional Death Benefit Rider: I had promised to discuss this aspect and here we are. This policy allows you to add a death cover as an option. Once added, and the policyholder passes away, an immediate payout is made to the nominated family member as they wait for the maturity payout in a waived-premium state. This optional death cover costs just a few Kenya shillings.
- Tax Efficiency Rules: Since Akiba is an endowment policy with profits (guaranteed in advance), the payouts are tax free. The maturity lump sum payout is fully exempt from income tax. Again, since it is a cash value life insurance, you are bound to enjoy a 15% per annum tax relief on the premiums you pay capped at KES 5,000 per month or KES 60,000 per year if your policy is 10 years or more.
Liquidity, Policy Flexibility, and Non-Forfeiture Clauses in Akiba Endowment Policy
- The 24-Month (2 Years) Lock-in Period. During the first 2 years (24 months) of the policy term, you cannot bolt out. Big expectations come with huge commitments. You can only opt out after the end of the second year. However, within these 2 years, if you experience financial difficulties, you have options that you can use to stay compliant with the policy requirements. If you are unable to pay for a month or so, you can just pay the arrears and the policy becomes active again without doing anything. In case your arrears are way off for a period of more than 6 months and you want to start contributing again, you might be subjected to a medical checkup. This is to minimise risk of people looking to misuse their insurance covers. If you are expecting a long period of financial difficulty, you can request the under-writer for some time away and when you come back the policy can be re-dated.
- Surrender Cash Value. If your policy is beyond 2 years (24 months), it gains a cash surrender value. During this time you can take a policy loan or opt out through a cash surrender value if you are going through a financial difficulty. In this option, you will be penalized and you will get up to 95% of your contributions depending on the age of your policy.
- Automatic Paid-Up Provision. After the same first 2 years, your policy also achieves a paid-up option state. This means that if you are facing some financial difficulties along the policy term and you are unable to pay your premium, you can just stop paying and your policy will automatically achieve a paid-up option state. Again, you can formally request for the paid-up option. What is a paid-up option? Instead of taking your contributions, and suffer the cash surrender value penalty, you can let the money remain invested with the insurer until the end of the policy term. You will receive a lower maturity payout, but you will not be penalized.
- Policy Loan: When the policy reaches 2 years, you are eligible for a policy loan in Britam Akiba Savings Plan. The amount of loan you can receive is up to 80% of your policy cash surrender value. A policy loan also helps you when you are struggling to fund your policy, especially when you are sure your struggles are seasonal.
The “Hard Look”: Strategic Pros vs Considerations
Akiba Savings Plan is a really great investment especially when you have a strong, steady income. If you have achieved financial stability, come for it.
| Britam Akiba Strengths (Pros) | Britam Akiba Considerations (Cons) |
| Guaranteed Capital Protection: Yes, you will enjoy zero market risk on principal. Even if the economy is struggling, your maturity payout is locked. | Tax Relief Limit: Terms under 10 years (5 to 9 years) do not qualify for a tax relief. This is another reason to save for 10 years and above. |
| Higher Returns: Policy terms of 10 and above years have higher returns that might surpass unit trusts such as Money Market Fund, also considering life protection that still slashes some portion of premium. I recommend you consider longer policy terms. | Inflation Risk: This is a general factor in all investments and assets. High inflation affects money in the bank or investments. Nothing is immune to inflation including your savings in Akiba endowment policy. |
| Shorter Minimum Terms: 5 to 12-year options provide faster maturity than traditional 15 to 20 year endowments. | Early Liquidity Penalty: Surrendering before 2 years will tie up your contributions, unless you re-date, or pay the arrears. |
| Built-in Protection: Britam Akiba has built-in death cover and waiver of premium ensuring your goals are completed even if life ends prematurely. | Short-Term Savings Disadvantage: The longer you save, the higher the returns. If you want to get maximum savings returns, longer policy terms are recommended, 10 to 12 years. |
| Older Entry Age Limit: Accessible up to age 65. The limit is higher than typical endowment policies limits and a maximum age of 70 years on cover is very considerable. However, I recommend Akiba Savings Plan to people below 18 to 50 years for better returns. | |
| Tax Relief Limit: Policy terms of 10 years and above (10 to 12 years) qualify for a tax relief of 15% in premium. This will reduce your tax burden. |
Ideal Client Profiles and Use Cases of Akiba Savings Plan
Most people fit Akiba so well. Everyone has those financial goals that need guaranteed payouts. The 3 challenges in life (building a house, educating your children, and retiring in financial freedom) need guaranteed savings.
However, Britam Akiba Endowment Policy is most suitable to the following:
- Risk-averse savers. Some of us want peace of mind knowing their investment is immune to economic shocks. In Kenya, you need at least one investment that is locked and secure regardless of the type of saver you are, I suppose.
- Goal-Specific Savers: Are you a goal-specific saver? If yes, Akiba is for you. If you are planning for a specific milestone 5 to 12 years out, such as buying a land or house, building an education fund, or launching a business, adopt this policy. If building education fund, I would however recommend an education policy.
- Self-Employed/Business Owners: Akiba savings plan enforces disciplined saving. This discipline is required by everyone, especially the self-employed and business owners since they do not have retirement schemes.
I hope I have covered Britam Akiba Savings Plan intensively and extensively, answering most of your questions.
If there is a part of Akiba that you have not understood, chat with me via the WhatsApp link or leave a comment in the comment section below.
If all is well, you can request a quote on Britam Akiba Savings Plan and I will get back to you in no time.
