Children have aspirations to do great things in Life. These days, it is not uncommon to see kids passionate about touring the world on a gigantic bird that flies high above the cloud with wings spread across the sky or kids who, at tender ages, can already picture themselves under the wig as they defend the innocents. The young generation are endowed with talents that make them want to build and create great stuff, help others live long, and achieve different goals in life. However, when the reality of life strikes, many of the big dreams falter before it can be actualised.
Big dreams require drivers such as self affirmation, consistency, commitment, hard work and most importantly, the acquisition of education to cement the career. While education plays a key role in helping to actualise various dreams, it becomes a barrier when the cost of attending a good school becomes somewhat difficult due to social, economic and other factors that set in over the course of time.
Today, many big dreams have had to come to an abrupt stop following the demise, disability or critical illness of a sponsor. In Nigeria, economic situations such as inflation, devaluation of currency, insecurity amongst others add to the list, causing many dreams to be washed down the drain. The high cost of education especially in higher education and institutions outside Nigeria makes it difficult for a common man to acquire basic institutional education.
What is an education insurance plan?
Education insurance is a plan which caters for the financial need of a child’s education in the event that the sponsor is unable to provide for the cost of education in the future as a result of death, disability or critical illness. This type of insurance is designed to facilitate learners to complete their degree programmes.
Investment in education insurance plans can help to secure the future against the increasing cost of education, as well as help the parents meet the exorbitant fee that is likely to grow in the future as the plan serves dual benefits of investment and insurance. It takes care of the funding that goes into children’s education and it covers from primary levels to tertiary.
These plans are the best ways to be financially prepared for any challenge and build a career without worrying about future costs by taking off the worry of who to shoulder a child’s education expenses even in the case of death of the parent as the plan allows the child to get periodic payment till the end of the child’s investment plan that will allow the insured child to pay off school fees.
Education insurance products
Education insurance plans are either channelled towards a protection plan or saving account (investment-linked education plan) . While both require that a lump sum benefit is released upon maturity along with the bonuses on the accrued premium, for the investment-linked education plans, well-performing funds could gain special bonuses and dividends when the policy reaches maturity.
For instance, Leadway Assurance savings plan serves as a flexible savings plan to assist with school fees responsibility. For this kind of plan, the accumulated amount in the policy holder’s account is paid automatically into the bank account provided at inception of policy upon the survival to the end of the policy term (maturity). The plan also allows coverage options to cover critical illness and accidental permanent total disablement. This means that if the policy holder is diagnosed with a critical illness covered by this policy like cancer, stroke, heart attack, kidney failure, coronary artery by-pass graft and coronary angioplasty, or sustains an injury, the amount selected as sum assured at inception of the plan is payable along with the accumulated amount in the policy holder’s account as at time of claim.
Commenting on the education plan available at Leadway, Adedayo Ogunlami, supervisor/retail direct channel, Leadway Assurance Company Limited, alongside an agent at the life section of the underwriting firm explained:
“For the educational coverage, there is the one that is called educational protection plan, that ensures the education of a child continues in case the guardian or the parent dies. For that plan, we are covering the child’s education depending on the class of the child. If the child is in primary one for instance, it will cover the child for the primary period. After that, you can still extend to secondary school or further.
“Our savings plan also has a life cover on it. We have a free life cover of 250,000 on each of our savings plans in case of death, a sum of 250,000 will be paid to the beneficiary as an addition to what the policyholder saved with the accrued interest. But in case the person says the 250,000 offering as free life cover is too small, you can ask for additional cover to the tune of N5 million but that would mean that you have to pay more premiums,” she added.
Other insurers in Nigeria offer similar products which cover the education plan of children for a certain period of time. AIICO Insurance offers the Children Education Plan (CEP), a policy that is taken by a parent/guardian on his/her life for the benefit of a child. The policy which is determined by the age of the child and that of the payor has a minimum term of 10 years while the maximum is 25 years; this means that a child whose age is 0 year is allowed up to a term of 25 years, a 10 year old is allowed up to 15 years provided that the payor will not exceed age 65 at maturity.
In the event of the demise of the life assured payment of premiums ceases and the policy will be acknowledged as death claim while the beneficiary is paid a guaranteed income of 1% of sum assured per month from the month of death of the Payor for the remaining period of the policy.
AXA Mansard operates the ‘Edu Plan Policy’ targeted towards securing children’s education. This plan comes with a life insurance policy which offers free annual health checks and loyalty bonuses payable every five years in cash as well as a number of other benefits upon demise. This plan also comes with other packages such as free annual health checks, total policy value, which is payable at the end of the policy duration, loyalty bonus, which is three months’ worth of premiums, added to the policy value every five years at the anniversary of policy.
Also, FBN Insurance ‘FlexiEdu Plan’ requires policyholders to take out the plan with a minimum term of five years and a maximum term of 20 years. At maturity, the assured benefit is paid either as a lump sum or in four annual installments. In the case of death of the policyholder before the maturity, 10 percent of the sum assured will be payable annually to the beneficiary till 100 percent of the sum assured is paid.
Generally, the education insurance policy can help to give a child the kind of education they want, even outside of the home country as it guarantees the continuation of education in the face of rising inflation rates, rising cost of living and unforeseen events. In other words, education insurance can help to secure big dreams.