By: Sandy Welch, Editor: MoneyMarketing
Recent research shows that 20% of those who withdrew funds from the Two-Pot System used the money to cover education costs. “This makes perfect sense,” says Arno Jansen van Vuuren, Managing Director at Futurewise. “Education costs are growing faster than inflation and CPI, so people are falling behind. Their incomes aren’t keeping up.”
He goes on to explain how education expenses are so often underestimated. Recent research by Old Mutual showed that public school and local university costs can reach between R1m and R1,5m. For private schooling, it could be as high as R3,5m. Add inflation, stagnant household income and rising debt, and it’s a lot to handle.
“People are struggling to fund even basic education, let alone tertiary,” says Jansen van Vuuren. “Many kids are dropping out of school due to economic pressures. When the economy worsens, school dropout rates increase. People can’t afford school fees.
“This links directly to NEET rates – where people are not in education, employment or training. Many drop out to find work but struggle due to high unemployment. This lack of opportunity creates a drag on the economy. Unemployment exacerbates the issue, creating a cycle with significant economic impact.”
Jansen van Vuuren believes strongly that education is key to solving many issues in South Africa. “If we can improve access to education and lessen the impact of economic downturns on it, we can break the cycle,” he says. However, as he points out, the crisis is substantial. Education is an underserved category. While the life and funeral insurance markets in South Africa are well-established, education planning is often only addressed at the highest income levels, typically through group schemes or savings plans. In terms of the middle and emerging markets, most options focus on savings or investment plans.
To address this gap, Futurewise launched its three-tier offering in October 2022, so it’s been active for a little over a year and a half. “We’re a startup in a competitive market, working hard to establish our brand and build awareness,” says Jansen van Vuuren. “Since education insurance is a relatively new category, we need to show people that this is an essential part of a well-rounded financial plan. We’re targeting both the mass and middle markets, encouraging people to go beyond basic funeral policies to include education, and eventually extending to savings and traditional life insurance.”
How the product works
Futurewise offers a retail product directly to consumers, particularly targeting the middle and emerging markets, to ensure access to education. It’s essentially an insurance plan specifically tailored for education costs. If a parent dies, suffers permanent disability or a terminal illness, the policy covers education-related expenses annually from when a child is five until they are 22. The funds are dedicated to education, ensuring children stay in school, complete secondary education, and have access to tertiary education. This way, by age 22, they are positioned to enter the workforce.
“Our solution has two components: an insurance plan for education costs and a savings plan,” explains Jansen van Vuuren. “The insurance includes cash-back options, allowing parents to save alongside the insurance policy. If no claim is made, the policy still provides value, ensuring families benefit even if the worst doesn’t happen.”
The third part of the solution is about providing value today, through a learning hub that offers access to tutors, curriculum support and online coding courses.
What sets Futurewise apart
These educational resources are online support available to all policyholders. “If you have an insurance policy with us, you get free access to our education hub, which has both a parent and a student section,” says Jansen van Vuuren. “In the parent hub, there are discounts on tech and online learning, including a 20% discount on a platform called GetSmarter for parent learning and upskilling. The student hub offers even more value, including 12 months of free online coding courses for kids. This benefit alone is valued at around R8 000.”
Advantage Learn is a partner, providing tutoring support, which is an incredible benefit for parents. “As our business grows, we aim to expand the learning hub, adding even more value for parents,” he says. “Our online resources provide something unique. It’s immediate value for policyholders. Parents can see tangible benefits today. This focus on immediate educational value is central to our offering, as we know parents care deeply about their children’s education. It’s what we’re most passionate about, and we’re committed to sharing that message widely.”
What lies ahead
The journey has been incredible and full of learning, says Jansen van Vuuren. “We’re continuously engaging with clients to understand what resonates with them and experimenting with new strategies to grow the brand. We feel a strong sense of purpose in making a difference in South Africa, and we’re passionate about reimagining life insurance as ‘next-generation insurance’.” This concept focuses on education insurance for the next generation and elevates the role of insurance to make it more meaningful and relevant for our clients.
Futurewise was initially launched as a direct-to-customer offering but is now starting to work with field agents to generate leads and customers. The roadmap includes expanding into group schemes and collaborating with financial advisers and brokers to integrate our offerings into their plans.
“Currently, our services are accessible through our website, where customers can sign up for a policy in about five minutes. Everything they need is available online. We’re also adding a WhatsApp option, making it even easier for users to engage through familiar channels. This aligns with our goal of making the process straightforward and accessible. As we prepare to enter the intermediated market, this addition will be a positive step forward,” explains Jansen van Vuuren.
“Our policies cover both university education and vocational training, like trade schools, as we aim to prepare people for the future job market, regardless of the educational path they choose. We cover registered, accredited institutions, so whether someone pursues a university degree or vocational training, they’re eligible, provided the institution is recognised. This support is available up to age 22.”
In the South African context, it’s crucial to meet the diverse needs of customers, and this aligns with the target market’s expectations. “We strongly believe a balanced financial plan should include an education-focused insurance policy tailored specifically to this need,” says Jansen van Vuuren. “We advise starting with a policy as early as possible, whether the child is a newborn or a teenager. While early savings benefit from compounding, our insurance plan is risk-based, depending on the ages of the parents and child. Life is unpredictable, and this policy provides peace of mind for educational costs if something happens to the parent. Many don’t realise that, after settling debts and estate costs, day-to-day expenses – like education – can suffer. Often, parents end up compromising on their children’s education because they didn’t plan specifically for it.”
Futurewise believes the time for education insurance has arrived, and is excited to see how the industry responds. “Our focus on this niche allows us to make a meaningful impact, especially in South Africa. There’s tremendous potential to make a difference in our country,” says Jansen van Vuuren.
