The true value of education policies

In 2022 alone, insurer Liberty paid more than R33 million for 732 claims on its EduCator benefit. Picture Ayanda Ndamane, Independent Newspapers.

In 2022 alone, insurer Liberty paid more than R33 million for 732 claims on its EduCator benefit. Picture Ayanda Ndamane, Independent Newspapers.

Published Feb 8, 2024

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As scores of South Africa’s 2023 matriculants embark on their tertiary education this year, thousands do so with the benefit of the education policies taken out by their parents to prepare for a time such as this.

Having achieved an impressive 82.9% National Senior Certificate pass rate, as announced by Basic Education Minister Angie Motshekga, the 2023 class has been hailed for its resilience in coping with Covid-19’s extremely difficult academic and psycho-emotionally draining years. Many pupils dealt not only with the loss of their teachers due to the “Covid-19 storm”, but also the tragic loss of their parents.

In 2022 alone, insurer Liberty paid more than R33 million for 732 claims on its EduCator benefit – an increase from the previous year which saw R25m paid out for 569 claims.

“Raising children involves significant costs, particularly when it comes to education. We have seen a good increase in EduCator claims year-on-year as more parents become aware of the available risk cover benefits. More parents are also aware that failing to plan can jeopardise their children’s future,” Kresantha Pillay, the Liberty chief specialist for risk products and lifestyle protector, says.

Pillay says the evolution of education as we know it has also affected the cost thereof and parents have started financially planning for education. Sometimes, parents start saving for their children’s education as soon as they learn they are pregnant. “This forward-looking approach is essentially presenting bigger opportunities and security for the parent and the child’s future,” says Pillay.

This is the kind of life-changing difference Lethabo Molefi*, 32, says she had in mind when she took out an education policy for her 18-month-old daughter this year.

Molefi has joined the ranks of many South African parents who are thinking and planning ahead for their children’s education.

“When my marriage ended this year, I realised that the weight of the responsibility of parenting is going to be on me,” Molefi, a senior social media manager in Johannesburg, says.

“I thought about what I want her future to look like, and the opportunities I wanted to be able to afford her as she is growing along. Looking at how much daycare costs right now, I compared it to what I thought high school and varsity would cost in future. Because of that, I knew that I don’t ever want to find myself in a situation where she is done with school and can’t go to varsity should she wish to.”

Pillays says: “an education career is no longer linear, predictable or defined, though born in South Africa, a child could end up studying abroad or as we now have seen, your child is mostly likely going into a career path that does not exist today, possible to be formed in the next 5 years. As a parent, you will need to consider this and ensure you have an education policy that can consider these possibilities.”

Liberty EduCator has adapted to the growing trend of international communities and emigration by extending its list of international universities to include more universities in Europe, North America, Australasia, and the Middle East for those looking abroad.

The country is notorious for being among “the world’s toughest education systems” as listed by MastersDegree.net, which considers factors like the education system’s structure, the country’s most challenging exam, tertiary education attainment, and the prevalence of stress among students, among others.

According to insights from Liberty, for a child who started Grade R in 2023, a complete education – including early childhood development, pre-primary, primary, high school, and three years of university – varies from costing a total of R3m for public school or more than R8m for private school tuition.

Pillay says that in the past, people would take out additional life, disability and critical illness insurance to ensure their child could obtain an education in case of a major life event or change.

“However, if you pass away, there is no guarantee that the money will be used for your child’s education. In the event of a disability, or critical illness, your coverage will likely focus on paying for rising medical expenses, not your child’s education,” he says.

“They need to be intentional and know that that the money will go towards your child’s education. If it is an education policy, it would then go towards education costs or even, pay the educational institution directly, eliminating the administrative burden and risk of the money being misused,” she says.

Molefi says: “I’ve picked up that my daughter is quite sharp, and I want to get her in the right hands so that it can unlock as many opportunities as possible. I don’t know what that looks like, but I just want her to feel like she’s got the option.”

Pillay says education policies are influencing financial products for parents, as more and more people want to secure their children’s educational future.

“We are also seeing a trend in investment in future planning, especially for young parents who are witnessing the changing educational landscape – one that provides greater choice to learners.

“As always, it is advised to make these informed decisions with the help of a financial adviser who will be able to assist you to put together a plan to ensure your life goals are achieved.”

PERSONAL FINANCE