Life insurance for all: Egyptian banks to offer coverage for lower-income groups

Safeya Mounir , Thursday 22 Feb 2018

Safeya Mounir examines a new life insurance plan designed for lower-income groups


Acting in cooperation with the Misr Life Insurance Company, Egypt’s banks will soon be offering a new life insurance plan called “Aman” to lower-income groups of society.

 “Aman”, meaning security in Arabic, combines the merits of both bank and insurance certificates and will cover those who do not fall under the current social security umbrella, including temporary workers, working single mothers, farmers, and other individuals who do not have social security coverage.

Details of the insurance plan were announced at a meeting earlier this week between President Abdel-Fattah Al-Sisi, Prime Minister Sherif Ismail, Governor of the Central Bank of Egypt (CBE) Tarek Amer, and head of the Administrative Control Authority Mohamed Erfan.

“One certificate in the plan is worth LE500, and anyone can buy up to five certificates,” said Mohamed Youssef, head of the Misr Insurance Holding Company. “There has been no obligation until now for employers to buy life insurance certificates for their employees. Workers can now buy them for themselves, or employers can take off a percentage of workers’ salaries to buy them.” Youssef said.

In the event of the natural death of the policyholder, “beneficiaries may receive a maximum of LE50,000 in life insurance payments if the insured had bought five certificates,” Youssef explained.

“If the holder dies in an accident, the beneficiaries will receive between LE50,000 and LE250,000 depending on the number of certificates the policyholder had bought. One certificate will also be included in a lottery every three months, and 200 winners will each receive LE10,000,” he added.

“Beneficiaries can get their dues from the Misr Life Insurance headquarters or from company branches. Compensation will be paid within two days of presenting a death certificate, or, in cases of accidental death, a police report,” Youssef said.

In both cases, “beneficiaries can choose between cashing the entire amount of the life insurance and receiving a monthly pension. If they do the latter, somewhere between LE1,000 and LE3,000 can be received monthly for between five and 10 years,” depending on the number of certificates the policyholder had bought.

Upon presenting their ID card, workers can buy Aman life-insurance certificates from the National Bank of Egypt, Banque Misr, the Banque du Caire and the Principal Bank for Development and Agricultural Credit.

The certificates are available to those between 18 and 59 years of age and do not require a medical report.

Aman is a three-year life insurance plan with an annual interest rate of 10.75 per cent and is renewed automatically. Policyholders may redeem the cash value of the certificates, plus any interest owed, but should they do so they will not receive the pay-outs associated with the certificates.

Presidential Spokesman Bassem Radi said that the Aman plan had been designed on instructions from President Al-Sisi to provide private sector workers who did not have coverage with life insurance.

Monthly insurance installments are LE4 for LE500 certificates, LE8 for LE1,000 certificates, LE12 for LE1,500 certificates, LE16 for LE2,000 certificates, and LE20 for LE2,500 certificates.

Head of the Egyptian Federation of Construction and Building Contractors (EFCBC) Hassan Abdel-Aziz believes that Aman will provide good insurance coverage for temporary workers who currently receive no more than LE500 in monthly pensions.

Construction is the largest sector in Egypt paying daily rates, and it includes 4.5 million temporary workers for whom the Aman plan has been primarily designed.

According to Hisham Yousri, secretary-general of the EFCBC, a contractor pays between 2.5 and four per cent in insurance on any project he works on. He cannot receive any dues from the company that contracted him unless he presents a copy of the insurance receipts.

Daker Abdel-Illah, a member of the EFCBC, said a ministerial decree issued 18 months ago obliged contractors to pay 0.004 per cent on each project to the Ministry of Manpower for the hire of temporary workers, but daily workers do not see any benefit from this sum. He said that many companies had filed lawsuits contesting the decree and that the new insurance scheme should resolve many outstanding issues.

Aman eliminates the existing dual systems, Abdel-Illah said, because “contractors used to pay other kinds of insurance for temporary labourers, resulting in other financial burdens.”

* This story was first published in Al-Ahram Weekly

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