Education insurance: paving the way for a brighter future

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KARACHI: In today’s fast-paced world, insurance has evolved into much more than just a safety net against health or life uncertainties. It has become a tool that empowers individuals to achieve various milestones in life, and one such critical goal is education.

As the costs of education continue to rise, especially for those who aspire to pursue their degrees abroad, the importance of investing in insurance becomes increasingly evident.

In Pakistan, while the importance of education is deeply ingrained in our culture, there’s often a noticeable lack of thought when it comes to investing in our children’s future. The truth is, as a society, we tend not to emphasise saving as much as we should. In fact, statistics show in FY2022, the saving rate in Pakistan was only about 11% of GDP whereas the average for the same around the world and in South Asia were 23.91% and 28.25% respectively.

This cultural trend sometimes leads to disparities in the lifestyles of Pakistanis working abroad and their counterparts back home.

Those who prioritise saving for their children’s education have the peace of mind that they are investing in the promise of a better future, not just academically but in terms of life opportunities. This emotional aspect underscores the significance of education insurance, bridging the gap and ensuring that every child’s potential is nurtured, regardless of geographical and financial constraints.

Nowadays, where the monetary strain associated with education is rising, insurance can serve as a considerable buffer for protection, especially in the face of unforeseen circumstances, a fact that many people remain unaware of. With the desire for quality education and the aspiration to study abroad becoming more prevalent among Pakistani students, there are significant financial considerations to address.

Inflationary pressures on education costs are being felt substantially across Pakistan. Over the past few years, tuition fees in public and private universities have gone up exponentially and a further 30-40% rise has been announced by some institutions in 2023. Similarly, miscellaneous expenses associated with education like the cost of stationary items and textbooks have also increased by about 30% in only the last three months.

It’s no secret that education plays a pivotal role in shaping one’s career. The skills and knowledge acquired during the educational journey sets the foundation for future success. In today’s rapidly changing job market, a well-rounded education is more important than ever.

However, one of the challenges prospective students face is the fluctuating foreign exchange rates, which can make studying abroad a daunting financial prospect.

Even when talking about acquiring an education in Pakistan, constantly rising tuition fees along with various overheads like costs for educational materials, transportation, and numerous other miscellaneous expenses can rapidly add up to make even the most basic education a financial hassle.

Here, insurance can serve as a saviour. Parents can opt for education-oriented unit linked endowment plans for their children’s education during their young age so that the parents are able to fund their higher education and help them pursue their dreams.

These plans offer stability and protection in the long run against domestic inflationary pressures, ensuring that the financial commitment made towards education remains intact. Educational insurance can substantially facilitate these academic ambitions for individuals.

In Pakistan, there are already service providers that offer diversely equipped plans under this umbrella. For instance, education insurance plans are customised on a variety of criteria to offer a tailour-made solution for each individual with the coverage available both as conventional and Shariah-approved Takaful plans.

Each plan is carefully curated according to what the customer needs. Even with insurance being a long-term investment, anyone who lies between the age of 18-65 is eligible to opt for a unit-linked insurance plan in Pakistan.

Additionally, a fact little-known across the country is that customers can opt for inflation-adjusted returns where premiums, values, and benefits enhance each year.

This feature is one that is pivotal, especially since it ensures that despite economic uncertainties, individuals can support their educational aspirations several years down the line. With inflation-adjusted returns, insurance plans can counter the time value of money allowing the payout to still be sufficient when it matures.

Moreover, some companies, primarily Jubilee Life Insurance, offer an education continuation benefit as part of their policies as well. Under this feature, in case something awry happens to a parent or guardian, the beneficiary can receive monetary benefits in installments to continue their education.

Insurance, once perceived solely as a safety net, has transcended those boundaries. It has evolved into a dynamic tool that empowers individuals to achieve their dreams.

Education, being one of the most significant aspirations for young minds, can benefit immensely from insurance-backed financial planning.

The writer, with 30 years of extensive experience of financial industry including both life insurance and consumer banking of Pakistan, currently serves as the Group Head of Retail Operations, Marketing, and Administration at Jubilee Life Insurance

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