A benefit sized as a share of your net take-home pay.
Monthly benefit
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Annual benefit
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Net pay (basis)
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Why income protection is sized on net pay, not gross
Income protection, sometimes sold as disability or permanent health cover, replaces part of your earnings if illness or injury stops you working for a long stretch. The instinct is to insure your gross salary, but that overstates what your household actually needs. Your family does not live on gross pay. It lives on what reaches your account after PAYE, SHIF, NSSF, and the housing levy have come out. This calculator deliberately starts from net take-home pay and applies the replacement percentage you choose, so the benefit is anchored to real spending power rather than a headline number you never see in full.
It also nudges you away from over-insuring. Replacing 100 percent of net pay is rarely sensible, partly because it can blunt the incentive to return to work and partly because the premium climbs steeply. A replacement level in the region of 60 to 75 percent of net pay is a common target, enough to keep the lights on and the loan serviced while you recover.
How the net-pay basis is built
To get net pay, the tool runs your gross through the standard Kenyan payroll stack. NSSF pension contributions come off first, tiered so the employee maximum the calculator applies is KES 6,480 a month. SHIF health contributions are taken at the rate this calculator uses of 2.75 percent of gross. The housing levy is deducted at 1.5 percent of gross. What remains is taxable pay, on which PAYE is charged using the progressive bands, then reduced by the monthly personal relief of KES 2,400. Each of these rates, bands, and the relief is the figure the calculator applies, and because SHIF replaced NHIF only recently and the levy and PAYE bands have shifted across Finance Acts, you should confirm the current deductions with KRA before treating any net figure as exact.
A 120,000 salary at a 75 percent replacement level
Take a gross salary of KES 120,000 a month and a 75 percent replacement target. The payroll deductions and the resulting benefit, using the rates this calculator applies, work out as follows.
| Step | Amount (KES) |
|---|
So a KES 120,000 earner is really protecting about KES 83,500 of monthly spending power, and a 75 percent cover replaces close to KES 62,600 of it. The chart sets gross, net, and the chosen benefit side by side.
The deferred period is your premium dial
The deferred period is how long you must be out of work before payments begin, and it is the lever that moves your premium most. A one-month wait means the insurer pays sooner and charges more; a six or twelve-month wait costs far less because you are self-funding the early stretch. The sensible way to set it is to look at your emergency savings and any employer sick-pay arrangement. If you could cover three months from savings, a three-month deferred period trims the premium without leaving a gap. A common mistake is choosing the shortest wait for comfort and then balking at the cost, when a longer deferral backed by a cash buffer would protect the same risk for less.
Will the benefit be taxed when I claim?
Tax treatment of insurance payouts depends on the policy type and on the rules in force, and it is an area worth checking rather than assuming. Separately, the premiums you pay may qualify for insurance relief at the rate this calculator references, 15 percent of premiums up to a monthly cap, which lowers the real cost of the cover. Confirm both the relief and any tax on the benefit with KRA or your insurer.
Should the cover rise with my salary each year?
Ideally yes. A fixed benefit loses ground to inflation and to your own pay rises, so a policy that lets the benefit index upward keeps your protection in step with the income it is meant to replace. Re-run this calculator whenever your salary changes so the replacement percentage still maps to your current net pay rather than the figure you started with.