Education is one of the largest and most predictable expenses in a family’s life. We know in advance when our child will finish school, so we can start preparing many years ahead. One of the tools for this is savings life insurance with an education goal.
How a policy differs from an ordinary deposit
A deposit helps you save, but it does not protect the goal. If misfortune strikes the parent who is putting money aside, the top-ups stop and the amount collected may not be enough. A savings policy solves this problem differently:
- if an insured event happens to the parent, the insurer may release the family from paying further premiums and keep building the savings at its own expense — if this option is included in the contract;
- on the agreed date, the child or the family receives the planned amount;
- the money is hard to spend on impulse: early termination is unprofitable, which encourages discipline.
How the programme works
The policyholder is usually a parent, and the insured person is the parent or the child, depending on the programme. The term is chosen so that it ends when the child enters college or university. Premiums can be paid monthly, quarterly or once a year. A guaranteed return is credited to the savings, and some insurers also distribute investment income.
What about the state programme?
Kazakhstan has a state education savings system called “Keleshek”, under which savings for children’s education may receive support from the state. The conditions of this support are set by law and may change, so check them in official sources. Life insurance does not replace the state programme but complements it: the main difference is protection for the family and keeping the goal on track if an insured event occurs.
A real-life example
Imagine a family in which a child has just been born. The parents take out a savings policy running until the child comes of age, with a small monthly premium. If everything goes to plan, the family receives the accumulated amount when the child finishes school. If something happens to the insured parent, the cover under the contract helps keep the goal on track, and the child still receives money for studies.
When to start
The earlier, the better. A long term lets you pay smaller premiums and earn returns for longer. If your child is already older, a programme is still possible, but the premiums will be higher.
What to look out for
- Which risks the parent’s cover includes and whether a waiver of premium is provided.
- The level of the guaranteed return and how additional income is credited.
- The surrender value by year — how much you can receive if you terminate early.
- The currency of the contract and whether premiums can be indexed.
- How and in what form the payout is made at the end of the term.
A Dynasty consultant will calculate several education savings options and compare insurers’ terms, and you can see indicative premiums in our calculator.