Britam dominates the life insurance market, and for that reason, I want to take you through its education policies, which are part of life insurance, and find out why they are so popular and widely adopted. Britam also dominates in pensions and investment products, which puts more weight on this review.
Britam has quite a good number of education savings policies, including Elimu Smart, Super E, Soma Sure, Msingi Poa, and Boresha Elimu. I have analysed all of them carefully, and for the sake of being helpful to you, I will focus on two (2): Boresha Elimu and Msingi Poa. Not that the others are not worth your time, they are, but Boresha Elimu and Msingi Poa are among the best education savings plans in Kenya.Â
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Super E Brief Overview
Super E is a proper education savings plan, very similar to Boresha Elimu and Msingi Poa, but I would not go for it for one big reason: its lower returns. This education policy has very low returns compared to these two.
It offers 6 bonuses over the last 6 years of the policy, and a maturity benefit is paid upon completion of the policy term.
The plan has a high policy term ranging between 10 and 25 years, and the minimum sum assured is KSh. 100,000. The maximum sum assured if you choose not to go for a medical check-up is Ksh. 6,000,000. There is no sum assured limit if you go for a medical check-up.
Super E also comes with death and disability cover, including waiver of premiums and payment of bonuses and maturity amount in case these unfortunate events occur. In case of critical illness or natural death, as listed in Britam’s document, you get paid 50% of the sum assured immediately, while waiting for the bonuses and maturity payout. In case of death through accident, the beneficiary gets paid 100% of the sum assured immediately, while waiting for the bonuses and the maturity payout. During these unfortunate events, premiums are waived (meaning Britam pays the premiums until maturity of the policy)
The policy also features tax relief (if the policy is 10 years or more), and you can access a policy loan after 3 years.
Elimu Smart Brief Overview
Elimu Smart is not actually an education savings plan, but rather a guarantee of continuity of your child’s education in case of the unfortunate event of death, permanent disability or critical illness of the parent(s) or guardian. The plan allows you to select the number of years you would want the school-fees cover to be in effect. Elimu Smart is renewable every year, and the premium payable is calculated based on your child’s current school fees. If any of the defined risks occur, a lump sum amount will be paid to you or your beneficiary. As you can see, it is not a savings plan, and the premium is very affordable, around KSh. 1,000 every year.
Soma Sure Brief Overview
Soma Sure secures your child’s education through an investment-linked education policy with insurance protection. You invest in a fund with a minimum of KSh. 20,000 in monthly deposits, and you can do additional contributions to your regular premium deposits.
This fund’s returns depend on the market performance, but you are guaranteed a minimum net return of 5% p.a. Soma Sure pays 35% of the investment fund in the last 2 years of the policy, 50% of the fund in the last year of the policy and 100% of the remaining balance at maturity.
In the unfortunate event of the demise of the policyholder, Britam will continue to pay the outstanding premiums so that the final payout is as you intended. The policy is designed such that you will not pay premiums in the last 3 years before maturity.
Another thing to note is that, after 2 years (25 months), you can access fully or partially at no charge.
Allow me to stop going further on Soma Sure, but at your request, I can have full information with me. I want to concentrate on the Msingi Poa and Boresha Elimu since they are the proper education savings plans.
Soma Sure outcomes depend on the performance of the underlying assets, and do not strongly enforce saving discipline. You can withdraw your funds at any given time and call it a day. That sabotages the sole intention of saving for the future education of your children. Early withdrawals in Soma Sure attract charges, 5% and 3% of the withdrawn funds in the first and second year, respectively.
Boresha Elimu Education Policy
Boresha Elimu is an education savings plan and endowment. The plan is designed to pay out 3 bonuses in the last 3 years of the policy term. For instance, if you adopt an 8-year policy, the three bonuses will be paid in the 6th, 7th and 8th years of the policy, each equivalent to the sum assured.
That means if your Boresha Elimu policy has a sum assured of Ksh. 1,000,000, you will be paid 3 bonuses, each amounting to Ksh. 1,000,000. You enjoy a 2-year tax holiday, where you stop paying premiums in the last 2 years of the policy.
Boresha Elimu premiums start from KSh. 3,000, and the sum assured is capped at Ksh. 15,000,000 if you choose to adopt the policy without a medical check-up. If you adopt the policy with a medical check-up, you can go beyond the Ksh. 15,000,000 limit.
The policy has life protection in case of permanent disability due to accident, critical illness and death of the policyholder. In case of these two unfortunate events, the policyholder stops paying the premium and the 3 bonuses are paid at maturity.
The plan also allows an optional death cover benefit, whereby in the event of the death of the policyholder, a payout equal to or less than the sum assured is paid together with the 3 bonuses at maturity.
What happens if you are unable to pay the monthly premiums? If your policy is above 2 years (25 months), you can opt for a cash surrender value that is determined by the underwriter, or you can opt for a paid-up option where you let the money stay with Britam and a lesser sum assured is paid at maturity.
If you are unable to pay within the 2 years of the policy due to unavoidable financial difficulties and the policy lapses, you can choose to pay the arrears, and the policy becomes active again. If you are unable to pay the arrears, you can request a redating and continue paying the premiums.
Why should you take the Boresha Elimu policy?
- Attractive returns: The plan is generous in terms of returns, and your money will be protected against inflation and still get some markup. The longer the policy term, the better the returns, therefore becoming a very effective education planning tool.
- Affordability: The plan is affordable and starts at KSh. 3,000. This ensures inclusivity, as many people can afford it.
- Generous Age Bracket: The plan’s entry age bracket is (18-60) years, and the maximum age on cover is 70 years. Most education policies’ maximum entry age is 55 years, therefore locking a lot of people out.
- Wide Policy Term: The plan policy term is between 6 and 18 years, inclusive enough even for late policy adopters.
What I don’t like about Boresha Elimu
- Unaffordable to Low Income Earners: Although the starting premium is pegged at Ksh. 3,000, this amount locks out low-income earners with other financial responsibilities to meet.
- Not Suitable for Those With Unsteady Monthly Income: Again, the plan is not suitable for those with unsteady monthly income flow. This plan is only suitable for those with a guaranteed monthly income, such as employees and business persons with good money flow.
- Policy Lapse: Do not take this plan if you have cash issues or unstable income. In case you are unable to pay the monthly premiums in the first 2 years, you risk policy lapse unless you pay the arrears or seek a redating, where the policy becomes active again after the lapse.
Msingi Poa Education Policy
Britam’s Msingi Poa education savings policy is designed to yield four (4) bonuses equal to the sum assured. The bonuses are paid at the end of the last four years leading to maturity.
The plan has a premium holiday of 3 years, meaning you will not pay premiums at the end of the 3 years until the maturity of the policy.
If the policyholder dies, an amount equal to the sum assured is paid immediately, and all future premiums are waived, and the 4 cash bonuses in this policy will be paid at maturity.
The plan also offers a policy loan if the policy has been in force for over 3 years and the premiums are paid up to date.
Another feature of this plan, similar to Boresha Elimu, is that if the policy term is 10 years or more, you get a tax relief of 15% of the payable premiums, capped at KSh. 5,000 p.m or Ksh. 60,000 p.a.
The minimum premium you can pay in the Msingi Poa education policy is KSh. 3,000, and the maximum sum assured you can subscribe to is KSh. 15,000,000 if you didn’t go for a medical check-up. If you choose the medical checkup option, the limit is way higher.
If you are unable to pay for the premiums in Msingi Poa, the same rules apply as in Boresha Elimu (refer above).
The bonuses in both Msingi Poa and Boresha Elimu education policies are tax-free.
Why should you adopt Msingi Poa Education Policy?
- Competitive Returns: The policy has very competitive returns and is one of the best in the market. Its policy term, ranging from 8 years to 22 years, also makes it generate great returns due to the time factor.
- Bonuses: The policy has 4 bonuses catering for both the IGCSE and CBE curriculum systems.
- Policy Loan: The plan also offers a policy loan if it has been in force for over 3 years and the premiums are up to date. You get up to 80% of your savings.
- Tax Benefit: If your policy is 10 years or above, you get a tax relief.
- Policy Activation: If your policy is below 2 years and you are unable to pay, causing it to lapse, you can activate it by paying the arrears or redate it.
What I don’t like about Msingi Poa
- Affordability Constraints: The policy is not affordable to low-income earners, and the ability to maintain a consistent savings discipline is hard for them. They may result in policy lapsing in the early stages.
- Long Minimum Term: The minimum number of years you can save under this policy is 8 years. This may lock out parents who need a shorter savings period, as informed by their needs. However, the Boresha Elimu plan has a lower duration of 6 years.
Having reviewed all these Britam education policies, I recommend focusing on Boresha Elimu and Msingi Poa education policies. Both offer strong returns and life protection, ensuring your child’s education is secured as long as premiums are consistently paid.
Are they better than other investments? In some cases, yes. In others, no. However, their key strength is combining savings with life protection, which helps enforce financial discipline and ensures your goals are met.
If you need a quote for any of the above policies, you can request one here.
