Buying a home through a mortgage is one of the biggest financial commitments most Kenyans make. But paying the deposit and monthly instalments is only part of the equation. You also need to protect the loan and the property against events that could put your family or investment at risk.
That is where mortgage insurance in Kenya comes in.
The important thing to understand is that “mortgage insurance” can refer to more than one type of cover. Mortgage Protection Insurance (MPI) generally protects the outstanding loan if the borrower dies or suffers permanent total disability, while home or property insurance protects the building against risks such as fire and other insured perils.
Several Kenyan lenders require these forms of insurance as part of their mortgage arrangements. For example, National Bank lists Mortgage Protection Insurance and House Owners Comprehensive Insurance among the external costs associated with its residential mortgage.
If you are searching for the best mortgage insurance in Kenya, the right policy is not necessarily the cheapest one. You should consider the insurer, coverage, exclusions, premium structure, claims process and whether the policy satisfies your mortgage lender’s requirements.
What Is Mortgage Insurance in Kenya?
Mortgage insurance is designed to reduce the financial risk associated with owning a home through borrowed money.
There are two major types worth understanding:
1. Mortgage Protection Insurance
Mortgage Protection Insurance, sometimes called Mortgage Protection Policy or Mortgage Protection Insurance (MPI), is generally a life insurance-based cover linked to a mortgage or other loan.
If the insured borrower dies or suffers a qualifying permanent disability, the policy can pay the outstanding loan balance, subject to the policy terms.
For example, Equity Bank describes its mortgage protection product as a life insurance policy that pays off the outstanding loan in the event of the borrower’s death or permanent disability.
Geminia Life also offers a Mortgage Protection Policy covering death and Permanent & Total Disability, with additional benefits such as critical illness and retrenchment available at extra cost.
2. Homeowners or Property Insurance
This is different from mortgage protection.
Home insurance protects the physical property, rather than simply paying off the mortgage after the borrower’s death or disability.
Depending on the policy, it can cover risks such as:
- Fire
- Lightning
- Explosion
- Flood
- Burglary
- Storm and other specified perils
- Damage to buildings and contents
- Personal liability
- Certain domestic-worker risks
For example, Equity’s Domestic Package provides cover for buildings, household contents and personal belongings against several risks, including fire, theft, floods, explosion and lightning.
Best Mortgage Insurance Options in Kenya
There is no single insurance company that is automatically the best for every borrower. Your mortgage lender may have approved insurance arrangements, and the premium depends on factors such as your age, loan amount, term, property and selected coverage.
However, these are some of the providers and insurance channels worth considering.
1. Britam Credit Life & Mortgage Insurance
Britam Holdings Plc is one of the established insurance groups in Kenya and offers Credit Life & Mortgage Insurance.
Britam says its mortgage insurance is designed to protect financial institutions against losses resulting from the death or permanent total disability of borrowers. The cover can apply to banks, SACCOs and other lending institutions.
One notable feature is that loans can be covered on a reducing-balance basis, meaning the amount insured follows the outstanding loan balance.
Why consider Britam?
- Established insurance provider
- Mortgage and credit-life experience
- Cover for death and permanent total disability
- Reducing-balance structure
- Can be arranged through lending institutions
- Additional protection options may be available
Best for: Borrowers looking for a mortgage/credit-life solution through a bank, SACCO or other financial institution.
2. Geminia Life Mortgage Protection Policy
Geminia Life Insurance provides a dedicated Mortgage Protection Policy.
The policy is designed to help protect a mortgage if the borrower dies or becomes permanently and totally disabled. Geminia says the premium can reduce as the mortgage balance is repaid.
The policy can also include additional benefits such as:
- Critical illness
- Retrenchment
- Death
- Permanent and total disability
Eligibility and additional benefits are subject to the insurer’s terms and underwriting requirements.
Best for: Borrowers who want mortgage protection with the possibility of additional personal protection benefits.
3. Equity Bank Mortgage Protection
Equity Bank Kenya provides mortgage protection through its bancassurance offering.
Equity describes its Mortgage Protection product as life insurance that pays the outstanding loan following the borrower’s death or permanent disability.
This can be convenient for borrowers who are already taking a mortgage through Equity because the insurance process can be integrated with the bank’s lending process.
Equity also provides property insurance options, including its Domestic Package, which covers residential buildings and contents against several specified risks.
Best for: Equity mortgage customers who prefer to arrange mortgage and property protection through the bank’s insurance channel.
4. Co-operative Bank Home Insurance
Co-operative Bank of Kenya offers home and landlord insurance through its bancassurance platform.
Its home insurance options can include buildings, contents, loss of rental income and mortgage monthly loan payments, depending on the selected cover.
This makes it particularly interesting for homeowners who want protection extending beyond the basic building itself.
Best for: Homeowners and landlords who want broader property protection alongside mortgage-related cover.
5. KCB Mortgage Insurance Options
KCB Bank Kenya offers several mortgage-related insurance products.
KCB describes Mortgage Protection Insurance as cover intended to pay the outstanding mortgage in the event of the borrower’s death. It also provides House Owners Comprehensive Insurance for risks affecting the property and has previously published rates for these covers.
Because insurance pricing and policy terms can change, borrowers should request the current quotation and policy schedule before making a decision.
Best for: KCB mortgage customers who want insurance integrated with their home loan.
