Insurance Relief in Kenya

As a Kenya resident individual, who has an life insurance policy, health (medical) insurance policy, education policy for you child, you are entitled to a relief of 15% of the premium paid up to  a maximum of Kshs 5,000/= p.m.

Section 31 of the Income tax Act Kenya (extract)

31. Insurance relief (Finance Act 2002 14.6.02)

1. A resident individual who proves that in a year of income-

(a) he has paid a premium for an insurance made by him on his life, or on the life of his wife or of his child and that the insurance secures a capital sum whether or not in conjunction with another benefit and that the insurance is made with an insurance company lawfully carrying on in Kenya the business of life insurance, and that sums payable under the insurance are payable in Kenya in the lawful currency of Kenya: or

(b) his employer has paid a premium for that insurance on the life, and for the benefit, of that individual which is charged with tax under this Act on that individual; or

( c) he, as well as his employer, has paid a premium for the insurance referred to in paragraph (b), shall, for that year of income, be entitled to a personal relief in this Act referred to as the insurance relief.

Provided that:-

  •  no insurance relief shall be granted in respect of that part of a premium for an insurance as secures a
  • benefit which may, at the option of the assured, be withdrawn at any time prior to the determination of the insurance, and in that case the proportion of premiums otherwise eligible for relief, if any, shall be the amount that the Commissioner may determine to be just and reasonable.
  • no relief shall be granted in respect of a premium for an insurance unless the person claiming the relief furnishes evidence as to the nature and conditions of the insurance and such other particulars as may be
  • required by the Commissioner.
  • an education policy with a maturity period of at least ten years shall qualify for relief and
  • the provisions of this section shall apply only to life or education policies whose term commences on or after the 1st January, 2003.
  • A health policy whose term commences on or after the 1 January 2007 shall qualify for relief:

(vi)         Where a policy is surrendered before its maturity, all the relief granted to the policyholder shall be recovered from the surrender value of the policy and remitted to the Commissioner by the insurer..

(2)           In this section “child” means any child of the resident individual and includes a stepchild, an adopted child and an illegitimate child who was under the age of eighteen years on the date the premium was paid.

THIRD SCHEDULE – Rates of Personal Relief and Tax

2. Insurance Relief

The amount of insurance relief shall be fifteen percent of the amount of premiums paid but shall not exceed sixty thousand shillings per annum.          

Illustration – Relief

Kshs p.a       Kshs p.m.     Kshs p.a.     Kshs p.m     Kshs p.a.      Kshs p.m.

Premium Paid Kshs

120,000/=        10,000/=        400,000/=        33,333/=        600,000/=         50,000/=

Relief @ 15%   

18,000/=             1,500/=          60,000/=         5,000/=       90,000/=               7,500/=

Maximum  p.a.  

60,000/=            N/A                  60,000/=               N/A              60,000/=             N/A

Maximum p.m,  

N/A                   5,000/=      N/A                5,000/=           N/A                    5,000/=

Allowed relief p.a.

18,000/=            1,500/= 60,000/=           5,000/=          60,000/=              5,000/=

Illustration – Effect on Income tax paid

Without Insurance Relief                          With Maximum Insurance relief 

Gross Pay                             KSh 200,000.00 KSh 200,000.00
NSSF Contribution               KSh 200.00 KSh 200.00
Taxable Pay                          KSh 199,800.00 KSh 199,800.00
Personal Relief                     KSh 1,408.00 KSh 1,408.00
Insurance Relief                   KSh 0.00 KSh 0.00
PAYE                                  KSh 52,596.25 KSh 47,596.25
NHIF Contribution              KSh 1,700.00 KSh 1,700.00
Net Pay                                KSh 145,503.75 KSh 150,503.75
Effective Tax Rate              26.30% 23.80%

Our recommendation

We recommend that you visit Ace Financial Advisory Limited, to have a personal financial plan prepared to enable you to take maximum advantage of the Insurance relief available, based on your current situation that takes care of your security needs for your dependants in case of death or permanent incapacity and your unforeseen cash out flows in case of a medical emergency. The insurance solutions will be procured through our Mohamed Ebrahim Insurance Agency.


Personal Financial Plan – Kshs 15,000/- We offer a rebate of Kshs 5,000/= if the plan is put into effect with the insurance intermediary being Mohamed Ebrahim Insurance Agencies.


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