Education is very key to the success of an individual and the society at large. Every parent/guardian would love their children to have a good education to help them in associating well in the society and compete with other people in today’s world for the scarce opportunities available. A good education equips one with everything they need to help them achieve economic freedom and to make their dreams come true. Quality education for your child’s should therefore be your top priority.
However, due to uncertainties such as the increasing costs of higher education, insufficient funds or the premature death of one, both parents and basically the bread winner, a child may not be able to complete his education or pursue his/her future dreams. This is the reason as to why his/her future should be anticipated
Education policies allow you to save in advance. Assuming you have a child who will require fees for high school and university. You can contribute a small amount of money on monthly basis and thereafter, when you require school fees, the insurer will pay. This is normally done after a certain specified time. A school fees policy will also pay school fees in the event of your untimely death. For example, if you had taken a policy for 10 years and unfortunately lost your life in an accident after contributing for just 1month, the insurer will still pay the entire school fees when it’s due.
The target amount in a school fees is normally referred to us the sum assured. Assuming you are targeting to have Kshs. 2 million in the next 5 years, your sum assured will be the Kshs. 2 million. This amount is normally paid on maturity of the policy. The insurer will add bonuses to this two million. Bonuses are normally declared every year according to the performance of the insurer financially and would normally be a percentage of the sum assured. In our case example, if the company you have taken a policy with declares a bonus of 5% on each year. Our yearly bonus will be 5% of Kshs. 2,000.000/- which will give a yearly bonus of Kshs. 100, 000/- translating to Kshs. 500, 000/- total bonuses. On maturity of the policy the insurer in our case example will pay Kshs. 2,500,000/-. An education policy will also pay in case of Permanent disability of the client.
It is important to note that in an education policy, the parent or guardian is normally the Life assured and the child will be the beneficiary. The premiums payable will be pre-determined and fixed based on the agreement between the insurer and the customer at the inception of the policy. The amount payable will depend on the customer and the value they have attached to the child’s education. An education policy allows you to determine the period of the policy based on when you need the money. You are allowed to choose a flexible way of paying premiums like on monthly basis, quarterly, half yearly, annually or by paying a single deposit. This could be done through your employer, through the bank, paying directly to insurers at their branches or through Mobile money transfers like MPESA and Airtel money. You can purchase this policies directly from the company, through an insurance agent, through banks and brokers. Bima mtaani can still assist you in getting cheaper and more efficient policies.
It is worth noting that anyone above the age of 18years can purchase an education policy in Kenya. Some companies will fix a minimum premium or amount payable but there is normally no maximum limit for the sum assured. Some companies will also have a maximum entry age. Most companies have 60 years which is the normal retirement age for Kenya but some will extend this to 70years.
Most education policies will acquire cash and paid up values after the payment of at least 3 full years’ premiums and after it has been in force for at least 3 years. This means that this policy can be cashed after three years of being in-force. This will vary from company to company with some policies in other companies acquiring a cash value after 1 year.
The amount paid for all insurance policies is based on age of the applicant with young people paying less. This shows you that the earlier you join the better. An individual is allowed to take as many policy as they want according to the number of children they have and their capability.
Here is a summary of the benefits you will get under an education policy.
- The Maturity benefit will normally be paid as a lump sum or in installments based customer preferences and education needs.
- All education policies may offer you loans with flexible repayments and this is normally secured by policy value. You do not need any other security to take a loan
- There is a Tax relief benefit of 15% percent of the premium paid. For instant if you are paying Kshs. 5000/-, you will get a relief of Kshs. 750. In essence you will be paying a monthly contribution of Kshs. 4,250/-. This means on monthly basis, you are saving a total of Kshs. 750/- before the insurer awards you bonuses.
- On total and permanent disability of the life assured due to an accident, an amount equal to the policy sum assured will become payable in equal monthly installments over a period of 36 months from the date of the accident.
- The company of your choice will normally waive the remaining premiums if the life assured is totally and permanently disabled due to accident or illness.
- In case of an accident leading to the injury and hospitalization of the life assured, the company will reimburse the in-patient medical expenses incurred subject to a certain maximum of percentage of the policy sum assured. Some companies will fix a limit for this reimbursement.
- In case of an accident involving the named beneficiary child leading to injury and hospitalization, the child’s hospitalization expenses will be reimbursed up to a certain maximum of percentage of the policy sum assured. Some companies will fix a limit for this reimbursement.
