New system upsets parents’ education insurance plans


Class eight pupils of Nabongo primary school in Kakamega. FILE PHOTO | ISAAC WALE | NMG

The looming shift to a new system of education has changed the maturity dates of education insurance policies bought by many Kenyan parents for their children under the current 8-4-4, throwing them back to the drawing board.   

The new 2-6-6-3 curriculum, which is due for rollout beginning next year, will see pupils spend just six years in primary school before proceeding to a three-year “lower secondary” programme aged about 13.

The new curriculum, whose piloting kicked off in May, will require the learners to pass an exam to proceed to “senior school” for another three years, aged about 15.

This is the age that most parents who relied on the current 8-4-4 system fixed the maturity of their policies, aiming to cover high school and university fees.

The impending syllabus reorganisation will therefore leave parents exposed as their children will join secondary school two years earlier.

Re-alignment impossible

The Insurance Regulatory Authority (IRA), the industry regulator, said there is no possibility of aligning the policies with the new education system, meaning parents will have to dig deeper into their pockets to keep their children in school.
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“Insurance is a contract with terms and conditions. One of the terms is the period of cover that comes with a maturity date,” said Noella Mutanda, the head of corporate communications at the IRA.

“Policy changes cannot affect existing contracts, but can incorporated in new contracts,” she said, adding that the change in curriculum and its effect on insurance policies cannot be applied retrospectively.

The new curriculum, which has been the subject of intense lobbying from stakeholders, is divided into four phases.

These are two years of pre-primary education, six years of primary education, three years each of junior and senior secondary and three years at a tertiary education.

It places emphasis on continuous assessment tests (CATs) over one-off examinations and is set to be rolled out in January 2018, covering nursery, Standard One, Two and Three.

The curriculum, which is being tested in 470 schools, will then progressively expand to cover pupils in the upper classes.

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Education secretary Fred Matiang’i has said the ministry was collaborating with the various stakeholders to minimise any turbulence that may arise from the transition.

Education policies in Kenya have over the years gained popularity among parents who see them as a suitable means of saving for their children’s increasingly expensive education.

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A policyholder periodically invests an agreed amount of money (premium) for a specific number of years which, upon lapsing, entitles them to a lump sum (sum assured) plus accrued profits (bonus).

For instance, a 12-year policy with one of the country’s leading insurance firms, where one pays about Sh5,500 per month, will see a parent get about Sh1 million at the end of the set period.

This amount includes a bonus of approximately Sh380,000, calculated at an interest rate of five per cent.

Such education policies are made even more attractive by the inclusion of life insurance benefits such as waiver on premium payable if the policy holder dies, adult and child accident covers and funeral expense covers.

With the impending curriculum change, existing policyholders now have two options — break their contracts or see out their policies as structured, meaning they pay the fees independently.

The punishment for breaking these education policy contracts, including not honouring the monthly premium payment for extended periods of time, is normally steep.

While this dissuades investors from exiting the contract at whim, the education system change may force some parents to take the financial hit out of lack of alternatives.

“In respect of education policies, the parents/guardians will decide whether they want it to run up to the end of the contract or amend the term of the policy,” the IRA noted.

“Any amendment to the contract implies that it is a new contract which will have to be underwritten.”

With the government keen on seeing to it that the new education system is fully integrated by 2023, policyholders can only wait and see the full impact of the new curriculum on their savings and plans for their families.