Should you take out an education insurance policy for your child, or would you be better off investing that same money and drawing on it when fees are due?
There isn’t a one-size-fits-all answer, but there are useful ways to think about the trade-offs.
Most education insurance policies in the Kenyan market combine two things: a savings element that grows over the years, and a set of additional protection features that allows parents to build a fund for future school fees while ensuring that the child’s education can continue if the insured parent dies or suffers a covered disability.
That protection side is what differentiates the education policy plans from the purely savings plans.
A common protection aspect in an education policy is the waiver of premium on death. This means that if the parent paying premiums passes away, the insurer steps in and keeps paying the premium. So, when the plan matures, the insurer pays out in full when your child needs the school fees money.
A related version extends this to total and permanent disability (TPD). If the parent becomes permanently unable to work, premiums are waived the same way, since disability can wipe out income. Some education policy plans add a critical illness benefit too, triggering an early pay-out or premium waiver on diagnosis of conditions like cancer or stroke.
All these riders protect the education goal against three separate ways a family’s income can be interrupted. That’s a meaningfully different promise from a plain investment account, which has no mechanism to notice a parent has died, become disabled, or fallen critically ill. The pure investment account simply stops growing unless someone else steps in.
Now consider the investing route on its own. Put the same monthly amount into a unit trust, a money market fund, or a mix of equities and bonds, and you’re likely to have more flexibility.
You can adjust contributions as your income changes, and you’re not locked into surrender penalties if you stop paying early. The trade-off is that none of this protects the goal itself if the person funding it can no longer do so.
So, how might a parent think this through? First, who else depends on your income, and what happens to this savings goal if that income disappears tomorrow? If you already have a solid life, disability and critical illness cover elsewhere, structured to fund your child’s education specifically, the riders in an education policy may add less value, and a pure investment vehicle might do the job with more flexibility. If you don’t have that cover, the built-in protection could be filling a real gap.
Second, how disciplined are you as a saver? An education policy’s fixed premium and long-term contract work in some parents’ favour, removing the temptation to dip into the pot. Others find that rigidity frustrating, especially with an uneven income, and prefer an investment they can top up or pause as life demands.
Third, what does the fee structure look like? Education policies bundle charges for the riders and administration, making it harder to see what you’re paying for each piece. A standalone investment usually has clearer fees, but you’d need to separately price life, disability, and critical illness cover to match the protection.
There’s also a middle path some families choose: a term life policy sized specifically to cover the remaining school fees liability, paired with a separate investment account for the actual savings. This can sometimes work out cheaper than a bundled education policy, though it requires a bit more hands-on management, since you’re running two or three products instead of one.
Ultimately, this comes down to your own risk appetite, existing cover, discipline as a saver and how much you value the simplicity of a single product versus managing the pieces yourself. It is a genuinely personal decision.
If you’re weighing this up for your own household, it’s worth sitting with a certified financial or insurance advisor who can look at your full picture and help you map out which combination actually serves your child’s education best.