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The Role of Education Insurance for a thriving future SA

23 April 2024 Futurewise

Access to quality education remains a challenge for many, particularly in the face of financial uncertainties. In this context, education insurance emerges as a powerful tool for securing the educational journey of our children and fostering a more inclusive and prosperous society; education is the cornerstone of progress, societal advancement and economic growth.

Start-up Futurewise firmly believes in the transformative power of education. Dedicated to establishing educational attainment and financial inclusion through innovative solutions tailored to meet the needs of South African families, its sole purpose is clear: to re-imagine life insurance so SA’s children can thrive.

Futurewise COO Arno Jansen van Vuuren, says by living this purpose, Futurewise provides assistance to parents/guardians, ensuring that their children's futures are secured, regardless of life's uncertainties: “Futurewise has been built on the belief that equipping our children to be able to complete their schooling, ensures a healthy, growing workforce that will play an essential role in South Africa’s economic growth into the future.”

Although a young company, Futurewise has a long history in education via its majority shareholder - Kagiso Trust (KT) - which was founded in 1985 during a period of intense struggle in South Africa. During this tumultuous time, KT strongly opposed apartheid by providing support to development institutions and initiatives across a range of sectors. After 1994 KT broadened its social vision through the establishment of Kagiso Trust Investments and for the next decade focused on uplifting communities through targeted education and enterprise development programmes.

KTH has joined forces with Venture Capitalworks to build Futurewise, an innovative education solution poised to revolutionise the insurance industry by developing a better way to get insurance for education. By serving as “a tutor for today and a trustee for tomorrow”, Futurewise provides access to educational support via educational courses, tutor support and learning tools through the Futurewise Learning Hub - from the moment a policy is taken out.

Jansen van Vuuren explains: “This means that our customers get meaningful value for their premium they pay from day one and equips parents and guardians with the resources and knowledge to actively participate in their children's learning journeys, empowering them to become true advocates for education.

“And our commitment extends beyond mere support. We recognise that education is a lifelong investment with far-reaching implications. That's why we offer an education insurance policy designed to cover the total cost of a child's education, including uniforms, books and travel, in the event of the death or disability of a parent or guardian. This policy ensures that educational expenses are not compromised.”

In the event of unforeseen circumstances, Futurewise is able to step in to become trustees, paying educational institutions directly and managing all educational needs and payments. This not only provides financial security but also peace of mind, freeing caregivers from worry about their children's educational journey.

The importance of education insurance becomes even more evident when considering the rising cost of education in South Africa. From primary school to high school and three years of tertiary education can cost anywhere between R1.5 and R3.5million.

Funeral policies or life insurance, while valuable, may not be specifically designated for educational expenses, leaving families financially vulnerable. Education insurance offers a sustainable solution to these challenges.

“By providing a dedicated policy that ensures direct payments to schools or educational institutions via a trust, we empower families to overcome financial barriers and secure their children's educational futures. This not only breaks the cycle of poverty but also paves the way for a more equitable and prosperous society, ” concludes Jansen van Vuuren.

About Futurewise
Futurewise is a 100% BEE financial services provider re-imagining insurance so that families are supported throughout life, not just in times of need. Acting as ‘a tutor for today and a trustee for tomorrow’, through next-generation insurance, the Futurewise approach ensures ongoing support and guidance throughout key life stages, from educational pursuits to financial planning.

Our accessible education solution removes barriers to entry, offering peace of mind with an added opportunity to save for education. Our unique Learning Hub offers benefits like tutor support, discounts and self-development courses, giving value from day one of joining our community.

Futurewise's commitment to holistic protection underscores our dedication to shaping a brighter future for generations to come, making us pioneers in the education insurance space.

Additional questions:

1.Can you elaborate on the market need driving the development of education insurance in South Africa, particularly concerning the challenges faced by families in securing quality education?

Futurewise firmly believes in the transformative power of education. Our sole purpose is to re-imagine life insurance so SA’s children can thrive. At the moment 51% of South African’s youths site lack of funding as the main reason for not being enrolled in tertiary educational institutions.Access to quality education from a young age is a barrier for most families in SA with household income growing at a rate of 5%, contrasted against education inflation of 9%. Yet education is central to stimulating economic growth and the prosperity of South African people.

2. Considering the socio-economic background of South African families, how does Futurewise ensure accessibility and affordability of its education insurance policies, particularly for those facing financial constraints?

We execute on our purpose of re-imagining life insurance so our children can thrive by creating an ecosystem in a shared value model that does insurance differently for education:
• With no underwriting and fully digital application forms we are able to ensure that our policies are affordable to all customers.
• Education solutions that make learning more efficient and accessible. Which provides discounts with key partners to ensure that education support will be accessible to all customers.
• Unlike a life policy where it is priced for whole of life or until you die, our policy is priced until the child turns 22, so the term of cover is shorter and for a specific period (eg) if the child is 5 then for 17 years, or if the child is 10 then 12 years.
• Where life policies pay a lump sum on an event, our policy pays annually, this reduces the burden on the guardian to manage a big lump sum payout and makes the policy more cost effective.
• We are also a small team focusing only on education so we can deliver good value to customers with low overheads.

3. Futurewise's role as trustees in managing educational needs and payments during unforeseen circumstances seems crucial. How does Futurewise ensure transparency and accountability in handling these responsibilities, especially concerning direct payments to schools or educational institutions?

As a pioneering insurance provider , we live by a key behaviour of being straight forward and this is portrayed through all the partnerships and relationships we hold. We have partnered with a key provider in the industry who manages beneficiary payments on behalf of parents and guardians. There is a full track record and paper trail to ensure that there is no misuse of any child’s funds, with monthly statements available.

4. With the rising cost of education in South Africa, how does Futurewise address the affordability gap for families, particularly concerning the disparity between the cost of education and the coverage provided by traditional insurance policies?

Futurewise recognises the challenge of education affordability in South Africa. We address this gap by offering innovative insurance solutions tailored to education expenses. Our policies are designed to provide comprehensive cover for education costs, including tuition, books and other related expenses, which is paid out annually for the child beneficiary. Additionally, we offer an optional savings plan, available to all policyholders, that assists parents to save for education costs during times of need. We have developed an innovative platform called the Learning hub, which provides value to our customers from day one. The platform is free of charge for our policyholders, and provides access to a world of learning support, educational courses and discounts. By bridging the affordability gap, we empower families to invest in their children's education without financial strain.

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