Education Insurance Policy

Due to the high cost of quality education, education insurance policies are quite popular in Kenya. An education insurance policy is a type of life insurance policy that is specifically designed to provide regular payments at some point in future that can be used to settle school fees.

How Does it Work?

First, you need to select a sum assured or the total benefit amount. Next, you need to choose a policy term, that is, the total duration of the policy. Once you have done this, your insurance agent will compute the premium. The premium is paid on a monthly, quarterly, half yearly or annual. The policy will typically start paying you a sum annually, ideally suited for secondary school or university costs, in the last few years of the policy. The number of payments you receive varies from company to company but the industry average is 4 to 7 payments in the final years of the policy.

Example

To best understand this, see the example below from a leading education insurance life insurer in Kenya.

Plan term: 20 years

Sum assured: 1 million

Year % Payout of Sum Assured
14 10% (100,000)
15 15% (150,000)
16 20% (200,000)
17 25% (250,000)
18 30% (300,000)
19 40% (400,000)
20 100% (1,000,000)

As seen in the above illustration, this is a 20-year education insurance policy that pays instalments starting with 10% (Kshs 100, 000) of the sum assured in the 14th year. This increases gradually every year as shown in the table above. In the last year (maturity), the plan pays 100% (Kshs 1, 000, 000) of the sum assured. In total, the plan pays out 240% of the sum assured.

Other benefits of the example education insurance policy above include:

  1. In the event of the death of the insured person, the insurance company pays 100% of the insured amount to a beneficiary of your choice. The company then waives the insurance premium and pays all the original benefits to your beneficiary when they fall due. 
  2. In the event of accidental death, the insurance company pays 200% of the sum assured to your beneficiary. The company also waives the premium payable and pays all the original benefits to your beneficiary when they fall due.
  3. Upon diagnosis of a critical illness, the insurance company pays 50% of the sum assured, and then waives your remaining monthly payments and pays all the original benefits to you or your beneficiary when they become due.
  4. In the event you become permanently disabled due to an accident or illness, the insurance company waives all remaining premium payments and pays all the original benefits to you or your beneficiary when they become due.

Do You Need an Education Insurance Policy?

To find out if you need an education insurance policy, ponder over the following:

  1. Do you want a forced savings plan that ensures education funds are not diverted to anything else?
  2. What would happen to the education of your children in the event of your demise? Have you set aside a nest egg hidden away to cater for the future education needs of your children?

If you want a forced savings plan and you don’t have a stash of money you have hidden away somewhere to fund your child(rens) education, then you definitely need an education insurance policy.

How Much Does an Education Insurance Policy Cost?

The cost of an education insurance policy will depend on several factors, namely:

  1. The sum assured or total benefit amount.
  2. The term of the education insurance policy, that is, the total duration.
  3. Your general health status.

What are the Requirements?

You simply need to complete a form and start paying the insurance premium. Medical examinations are not required by most insurance companies unless the sum assured is greater than 5 million Kenya Shillings.

To find out more about education insurance policies, request a no-obligation quote or contact us via our contact page or tap the call icon if you are viewing this page on a mobile device.

 

 

 

 

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