Insurance relief in Kenya: how life, education and health policies cut your income tax

What insurance relief is, in the law

Section 31 of the Income Tax Act gives a resident individual a "personal relief" called the insurance relief when they prove that, during the year, a premium was paid on a qualifying policy. The Third Schedule sets the amount: fifteen per cent of the premiums paid, but not more than sixty thousand shillings a year. KRA's individual income tax page repeats the same rate and cap.

A relief is deducted from the tax charged, after the tax bands have been applied — the same way as the personal relief of KES 28,800 a year (KES 2,400 a month) that every resident individual receives. So KES 1,000 of insurance relief means KES 1,000 less tax, whatever your tax band.

• Who pays the premium: you, your employer (if the premium is taxed on you as a benefit), or both — section 31(1)(a) to (c).
• Whose life: yours, your spouse's or your child's. Section 31(2) defines a child as your child, step-child, adopted child or child born outside marriage, under 18 on the date the premium was paid.
• Which insurer: for a life policy, a company lawfully carrying on life insurance business in Kenya, with the sums payable in Kenya and in Kenya shillings. To check a company, see the list of licensed insurers.

Which policies qualify — and which do not

Our guides explain the policies themselves: life and education policies and private health cover.

How to calculate your insurance relief, step by step

1. Add up the premiums paid in the year on every qualifying policy — yours, your spouse's and your children's — using the insurers' certificates.
2. Multiply by 15%.
3. Cap the result at KES 60,000 for the year (KES 5,000 a month in the payroll). The cap is for all your policies together, not per policy.
4. Deduct it from the tax charged, after the personal relief, to get the tax you actually pay.

KRA's Employer's Guide to PAYE gives this example: a life policy certificate showing annual premiums of KES 48,000 gives a relief of KES 48,000 × 15% = KES 7,200 a year, or KES 600 a month, entered in the employee's tax deduction card. The same rule applied to other amounts:

How to claim it: employees and everyone else

Section 31 grants no relief unless you give evidence of "the nature and conditions of the insurance". In practice, KRA's employer's guide sets out what employees do:

1. Ask your insurer for a certificate showing the name of the insured, the type of policy, the capital sum payable, the maturity date, the premiums payable and the start date of the policy.
2. Give it to your employer, who applies the relief each month in the payroll and attaches a copy of the certificate to your tax deduction card (P9A) for the year.
3. Tell your employer if the policy stops: the guide says employers review the payroll towards the end of the year, and no relief is due for a policy that lapsed during the year.

If no employer applies the relief for you, your annual return is where your income and tax for the year are settled: KRA says returns for a year of income are filed online on iTax between 1 January and 30 June of the following year. Keep the insurer's certificate as your evidence.

SHA, NHIF and medical funds: deductions, not insurance relief

Many pages still say that NHIF contributions earn insurance relief. That was true when NHIF existed; the current text of section 31 does not mention NHIF or the Social Health Insurance Fund. Since the Tax Laws (Amendment) Act, 2024, section 15(2) of the Income Tax Act instead lets an employee deduct from taxable income:

• SHIF contributions made under the Social Health Insurance Act, 2023 — section 15(2)(ae). How much you pay is in our SHA contribution calculator.
• Contributions to a post-retirement medical fund, up to KES 15,000 a month — section 15(2)(ad).
• The Affordable Housing Levy deducted from an employee's pay — section 15(2)(ac).

A deduction lowers the income on which tax is charged; a relief lowers the tax itself. A private medical policy you buy on top of SHA still counts for the 15% insurance relief.

Traps to avoid

• Surrendering a policy early: under proviso (vi) of section 31, if a policy is surrendered before maturity, all the relief granted on it is recovered from the surrender value, and the insurer pays it to KRA.
• Short education policies: an education policy needs a maturity period of at least 10 years to qualify.
• Savings you can withdraw at will: the part of a premium that buys a benefit you can take out at any time does not qualify.
• Adult children: premiums for a child aged 18 or over on the date of payment do not fall within the definition of "child".
• Letting a policy lapse: no relief is available for a policy that lapsed during the year.

To compare life, education and medical policies from licensed insurers, ask for quotes — and ask each insurer whether it issues the certificate KRA requires.

Sources

1. Income Tax Act, Cap. 470 — s.15(2)(ad) and (ae), s.31 (insurance relief) and Third Schedule, Head B (amount of the reliefs), as amended to 1 July 2026 — Kenya Law
2. Kenya Revenue Authority — Individual Income Tax (personal relief, insurance relief, filing returns on iTax)
3. Kenya Revenue Authority — Employer's Guide to Pay As You Earn, 2017 edition (insurance relief in the payroll)