Arno Jansen van Vuuren, Managing Director at Futurewise
Education is one of the most important investments parents can make – but also one of the most expensive. Whether your child is in preschool or preparing for university, the cost of education is rising steadily every year. Life insurance might seem like a practical way to plan for the unexpected, but in reality, managing your child’s education costs through a standard life policy can be complex, risky and admin intensive. That’s where education insurance – a relatively new solution on the market – can make a big difference.
What does it cost to put a child through school?
The numbers are sobering. According to research commissioned by Old Mutual, the national average cost of a year in public high school was R31,343 in 2021 – with private schools coming in at nearly three times that at R90,850. For a child completing pre-primary to Grade 12 and then heading to university, this can add up to anything between R1.5 million and R3.5 million, depending on the type of school and tertiary institution chosen.
Why life insurance might not be the safety net you think it is
Many parents opt for life insurance, believing it will secure their child’s education should the worst happen. But this can be far more complicated than it sounds.
Arno Jansen van Vuuren, Managing Director at Futurewise, explains: “To do this through life cover, you’d need to estimate the total cost of education until your child turns 22 – including tuition, books, residence, and inflation – and then work out the present value using an assumed interest rate. Then you’d need to take out a policy for that lump sum, knowing it has to be reviewed every year as your child ages and their needs shift.”
When a life policy pays out, the sum lands in your estate, where someone needs to invest it responsibly, draw down at the right rate, ensure school fees are paid on time, and resist using the money for any other expenses. Get the maths or management wrong, and your child could be left short before finishing their education.
How education insurance works – and why it’s different
This is exactly why education insurance exists – to provide a ring-fenced, purpose-built solution that takes care of all those moving parts for you.
“If something happens to a parent, the policy pays the school fees directly to the educational institution, says Jansen van Vuuren. “There’s no reinvesting needed, no calculating drawdowns and no risk of the funds being used elsewhere. It’s administered annually, until the child turns 22.”
5 smart questions to ask before you buy
Jansen van Vuuren highlights five questions families should consider before taking out education insurance:
- Is the product aligned to your child’s actual educational needs?
- Does the cover amount increase or decrease based on your child’s age?
- Are benefits paid annually and directly to the school or university?
- Does the benefit grow with inflation before and after a claim?
- Does it offer immediate value now, such as education savings, cashback or learning support?
Insurance, reimagined
This is where providers that specialise in education insurance have an important role to play. For example, Futurewise’s education insurance product covers up to R80,000 per annum, paid directly to the education institution until the child turns 22. In the event of a claim, fees are paid directly to the institution each year. If there’s surplus after tuition, it can be used for approved education-related expenses via a managed card system – no annual recalculations or financial juggling required.
“Education insurance takes the guesswork out of securing your child’s future. It’s not just about planning for the worst – it’s about making sure your child’s education is protected, no matter what,” says Jansen van Vuuren.
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