Insure fees to save your child from uncertainties

After Florence Nanyonga, a mother of four, lost her husband in 2017, the least of her worries was how she was going to raise the children’s school fees seeing as the major bread winner had passed.

“Before his death, my husband had been saving for our children’s education with one of the insurance companies in this town. When our first born was joining secondary school last year, the company gave me Shs10m,” she recalls.
Nanyonga is rest assured this money will help her son complete his secondary education.

Similarly in 2010 Sarah Kamya, 29, was only 17 when she lost her parents in a fatal accident. The tragedy meant she had to step into the gigantic shoes of her parents and begin fending for her two siblings, Jim Kamya and Joseph Kamya.

Luckily for her, her parents had been saving money with one of the insurance companies under the education cover. Yes, she felt the loss of her parents in many aspects of her life but did not lack fees or her siblings.

“The only time I felt overwhelmed was when I had to look for money to buy scholastic materials because the insurance company would send the school fees directly to the school account,” says Kamya.

Minimum, Maximum
Sandra Nalumu of Cooperative Insurance Company notes that premiums charged vary from one insurance company to another. However, the minimum for some companies is about Shs50,000 per month.

However, she says that parents should put into consideration the fees structure of the different schools the children attend as they save.
“This helps parents know the percentage they need to save. Saving 50 per cent of the child’s fees puts you in a better position,” Nalumu explains adding that the more the savings, the higher the bonuses.

And in case a parent passes on before the accumulation phase is completed, the insurance company is expected to assume responsibility of paying subsequent premiums. This is done from the time of death to the time when the withdrawal starts.

Timeframe
Mark Bogere of UAP Insurance mentions that for better planning, parents can start saving for their children from the time they are a few months old. The timeframe ranges from to 18 years.

“Within this timeframe, parents can as well plan for their children’s university education at an early stage. However, if you were not able to save before the child turned 19, then the education policy will not apply to them,” Bogere says.

Different insurance companies have different education packages depending on the policy agreed upon. For example, for one with a child in Primary Two who wants insurance to pay fees for secondary education, the term for the accumulation phase is six years. If the fees requirements are for Senior One up to Senior Four, then the withdrawal phase is four years. “In case the insured child dies, parents can always recommend another child.”

Risks curbed
Aidah Namutebi, a sales executive at Jubilee Insurance, says whereas the need for your children to go to school is important, death is unpredictable and so are accidents that may rob one of their ability to function normally.
“This is why it is important that parents have a clear plan of how they save for their children’s school fees such that in case of any eventualities, the children are not robbed of their future,” says Namutebi.

For Kamya’s father, the insurance company saved his children. “My father had been saving Shs50,000 for 22 years. He died almost half way his policy term but we received all the money he was meant to get after the 22 years which was Shs900m plus all the accrued bonuses,” says Kamya.
Denis Muyamba, a teacher in Bweyogerere, who saved with the former Africa Premier Health, says it was unfortunate that the company collapsed but he had gained from it immensely.

“After 10 years of saving, I got enough money to pay my son’s fees from Senior One to Senior Four. This money had accumulated over time but it was granted to me so that in case of any emergencies during my policy term, my son would still go to school,” says Muyamba. Namutebi, however, advises that before one commits their money to an insurance company, they should research keenly about it and ensure that they have credible sustainability of their funds.

Immense benefits
Peter Mukiibi, a father of four, says not only do you gain from saving schemes, you also get an extra benefit in the course of your premium term.
“You can use your policy document to process a school fees loan from commercial banks. You will require the child’s passport photo, birth certificate and the policy holder/guarantor to process the loan,” says Mukiibi.

Mukiibi adds that as a parent, you may not realise the benefits of education insurance but your children will gain a great deal from it.

Avoid risks
Background check. It is important to make a background check about the insurance company you want to join and note the number of years it has been in existence, its funders and the origin.
Fix the money. Fixed deposit banking is another solution to the risks of losing fees money to unscrupulous dealers. Sam Oweka, a taxi driver in Kampala, has a fixed deposit account with Finance Trust bank. He is only allowed to withdraw twice in a month. “I do not have an ATM card which makes it difficult for me to access the money anyhow. I only withdraw when I am going to pay school fees.”

Personal experience
Sarah Kamya’s father had been working in Mumias Sugar in Kenya where the family grew up from. the father, Stephen Kamya died at 64 years. He had his plan operating in Kenya.
They got about Kshs280,000 which was transferred to the schools they were studying. She is a business lady who has a boutique in Busia, she got into this after she quit her job in clearance and forwarding.
Important to note
Education Insurance funds have been used the world over to make education affordable and yet secure. This is a plan one sets up with a life insurance company in trust of a beneficiary usually their child. It caters for the savings and the risk attributes towards completion of education. Every parent knows at the birth of the child that four years later they will need school fees for them.

It is only prudent to calculate that one needs Shs1m per term for six terms of nursery hence has four years to save Shs6 million. This means putting away just Shs125,000 per month making certain that four years later, the whole nursery school is covered. The unique component they carry is while you are saving to achieve a goal; your life is insured.
Source: Daily Monitor
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