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The rising cost of education is forcing parents and students to burden themselves with hefty loans. Fortunately, education policies provide a long-term plan that sorts your child’s school fees smoothly.
Kenya’s best education insurance policies include Britam, Prudence, Jubilee, CIC, Madison, ICEA, and UAP Old Mutual insurance companies.
Unfortunately, no graduate is guaranteed a job after completing the course, leaving most learned individuals with increasing debt due to penalties. However, with a good education insurance policy you are guaranteed to fund your child’s education with zero pressure!
So, which is the best education policy in Kenya?
Let’s find out!
What Is An Education Insurance Policy?
An education policy is a financial tool that allows you to save up for your child’s education. It operates similar to savings or investments however, the funds in this financial product are utilized in education-related requirements.
For example, tuition fees, accommodation, and textbooks, among other relevant necessities. So, how does education insurance work in Kenya?
Typically, the policyholder or you as the parent pay/deposit premiums with the insurer for a specified period. When the time elapses, the insurer pays the child a lump sum or regular payments which should be directed to their education.
It’s important to note that, unlike other policies, education coverage is usually combined with other protections such as life cover. This means that in case of the parent’s demise, the insurance company continues to fund the child’s education ensuring they resume their academic journey.
(Are They Worth It? Any Alternative)
As the cost of education in Kenya continues to rise, families face increasing financial pressure to provide their children with quality schooling.
The expenses can be daunting whether you’re looking at local public schools, private institutions, or even international universities. Here’s a closer look at why education insurance is critical in Kenya today.
Soaring Education Costs
From primary to university, the expenses associated with education are climbing steeply. Private schools can demand hefty fees, often exceeding Ksh 100,000 per term for basic primary education.
The financial burden only intensifies at the university level, where specialized programs—like medicine or engineering—can cost millions throughout a student’s academic journey.
For instance, a 2023 report by the Kenya Institute of Policy Analysis and Research (KIPRA) revealed that the average cost of university education in Kenya varies dramatically. It ranges from Ksh 450,000 to Ksh 1.5 million, depending on the institution and the chosen program.
This figure doesn’t even account for additional expenses such as accommodation, textbooks, and transportation. With inflation and an increasing demand for educational services, these costs are projected to continue their upward trajectory.
Average Annual Education Costs in Kenya (Ksh):
- Primary School (Private): 100,000 – 300,000
- Secondary School (Private): 150,000 – 500,000
- University (Public): 100,000 – 450,000
- University (Private): 450,000 – 1.5 Million
The Inflation Factor
Kenya has experienced significant inflation over the last decade, impacting the costs of goods and services, including education. Education insurance policies can act as a buffer against this inflationary pressure by locking in premiums at a fixed rate.
This strategy ensures that families can afford their children’s education even as costs escalate. Moreover, the savings accumulated through education insurance grow with interest.
As a result, this offers a payout that outstrips what might be gained through standard savings accounts that don’t account for inflation.
Navigating Life’s Uncertainties
Life is full of surprises, and unexpected events—like job loss, illness, or even the death of a primary income earner—can significantly disrupt a child’s educational path. Fortunately, many education insurance policies in Kenya include life-cover riders.
This means that in the event of a parent or guardian’s passing, the insurance provider continues to make contributions on their behalf, ensuring the child’s education remains funded.
A compelling example from a case study by Britam Insurance illustrates this point: a policyholder who tragically passed away due to illness had an education insurance plan with life cover.
Although the family could no longer contribute to the policy, the insurance company upheld the agreement. They provided sufficient funds for the child to complete secondary and university education without interruption.
This real-life scenario underscores the significant security that education insurance offers, extending beyond mere savings.
Is Education Insurance A Good Investment?
When planning for your child’s educational future, education insurance in Kenya can be a smart financial move. These policies are specifically designed to protect against rising educational costs and unforeseen life events.
Here’s a closer look at the key features that make education insurance a valuable investment.
1. Flexible Payment Plans
Education insurance policies provide a range of payment options to suit different financial situations. Parents can select from monthly, quarterly, or annual contributions, allowing them to choose a plan that fits their cash flow.
For instance, those with variable incomes, like self-employed individuals, might prefer quarterly or annual payments, while salaried employees may find monthly payments more convenient.
Example: Companies like Britam offer customizable payment schedules that accommodate various income levels, ensuring that saving for education is manageable.
2. Payout Options: Lump-Sum vs. Periodic
These policies typically allow for two types of payouts: a lump sum at the policy’s maturity or smaller, periodic payments during the policy term.
A lump-sum payout is particularly useful for major educational expenses, such as university tuition, while periodic payments help cover ongoing costs like term fees.
This dual approach enables parents to strategize their financial planning effectively. Options Include:
- Lump-Sum Payout: Ideal for significant expenses incurred at once.
- Periodic Payments: Suited for continuous educational costs over several years.
3. Life Cover Protection
A vital feature of education insurance is the life cover rider. This component ensures that if the policyholder faces unfortunate circumstances—such as death or disability—the insurer will continue contributing until the policy matures. This guarantees that your child’s education remains funded, no matter the challenges that may arise.
Illustrative Case: A family insured with CIC Insurance tragically lost the father, who was the main earner. Thanks to the life cover rider, the insurer took over premium payments, ensuring the child could complete university without financial burdens.
4. Maturity Bonuses and Rewards
Many education insurance policies offer maturity bonuses, which provide extra value when the policy comes to a close. These bonuses might include additional interest, loyalty rewards for consistent contributions, or performance-based bonuses linked to the insurer’s success.
Example: Jubilee Insurance incentivizes long-term commitment by offering a loyalty bonus for clients who consistently pay premiums for over ten years, enhancing the final payout.
Types of Bonuses Include:
- Guaranteed Maturity Bonuses: Offered upon policy completion.
- Loyalty Bonuses: Rewards for sustained premium payments.
- Investment-Linked Bonuses: Based on the insurer’s market performance.
5. Tax Benefits
Investing in education insurance can also yield tax advantages. In Kenya, premiums paid towards these policies can be deducted from taxable income, making them even more appealing.
Under the Income Tax Act (Cap 470), you can claim deductions of up to Ksh 60,000 per year, leading to substantial savings over time.
Best Education Insurance Policy In Kenya
Several insurance companies in Kenya offer education insurance policies tailored to meet the diverse needs of parents. Each provider features unique benefits and additional riders that distinguish their products.
Here’s a look at some of the top education insurance providers in Kenya and what they offer.
1. Britam Education Policy
Britam is a leading insurance provider in Kenya, offering a comprehensive education insurance plan that covers primary, secondary, and tertiary education.
Key Features:
- Flexible Premiums: Choose monthly, quarterly, or annual payment options.
- Bonus Payouts: Receive a bonus at maturity if all premiums are paid consistently.
- Life Cover Rider: In the event of death or permanent disability, Britam will continue premium payments until maturity.
2. Jubilee Insurance
Jubilee Insurance offers the Career Life Plus policy, designed for parents investing in long-term education savings.
Key Features:
- Loyalty Bonus: Consistent contributors receive a loyalty bonus, enhancing the policy’s maturity value.
- Investment-Linked Growth: The policy is tied to an investment fund, allowing savings to grow over time.
- Tax Benefits: Offers tax relief on contributions, further incentivizing saving.
3. UAP Old Mutual – Education Plan
UAP Old Mutual’s education plan combines savings with life cover, protecting educational funding in the face of adversity.
Key Features:
- Maturity Benefits: A lump-sum payout at the end of the policy can fund secondary or tertiary education.
- Partial Withdrawals: Allows withdrawals at key educational stages.
- Additional Cover: Includes life insurance and critical illness coverage.
4. CIC Education Plan
CIC Insurance offers a structured savings plan with a life insurance rider to ensure educational funding continues despite unforeseen events.
Key Features:
- Regular Payouts: Payouts aligned with significant educational milestones, from primary to university.
- Waiver of Premiums: Future premiums are waived if the policyholder passes away, keeping the policy active.
- Life Cover Rider: Guarantees education funding if the policyholder cannot continue contributions.
5. Madison Insurance
Madison Insurance’s Smart Scholar Plan is designed specifically for university education savings, offering guaranteed payouts at various milestones.
Key Features:
- Guaranteed Benefits: Provides payouts at key educational stages.
- Built-In Life Cover: Ensures funding continues if the parent cannot contribute.
- Flexible Terms: Options for monthly, quarterly, or annual payments.
6. ICEA Lion – Education Plan
ICEA Lion provides a comprehensive education plan focusing on long-term savings, flexible premium options, and life cover to secure your child’s education.
Key Features:
- Flexible Premium Payments: Monthly, quarterly, or the available annual payment schedule.
- Loyalty Bonus: Offers bonuses for regular, long-term contributions, increasing the final payout.
- Additional Riders: Options for critical illness cover and income replacement benefits.
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Final Thoughts
Planning for your child’s future allows you to go about life peacefully. Thanks to the top education insurance policies, they offer flexible and guaranteed funding to your children’s education ensuring a smooth education journey.
All you need to do is analyze whether it’s affordable, flexible, and reliable to fund your child’s education before committing to it. For more smart financial tips, visit our store today!
