Insuring continuity in education

In Pakistan, promoting life insurance products is a challenge due to a lack of awareness associated with how such products work, low literacy rates and an underlying morbidity associated with death. Nevertheless, as Pakistanis become increasingly aware and forward-thinking, industry-wide efforts to promote life insurance products have been gaining traction, resulting in an annual growth of 30 to 35% during the last two years (source: JCR-VIS Sector Update, June 2016).

In view of these changing market dynamics, Pakistan’s oldest public insurance company, State Life, recently launched a campaign to promote their ‘Education Continuation Scheme’.

According to Razia Ramzan Dossa, Head of Corporate Communications, State Life, “this product has been a part of our group and pension schemes portfolio for a long time. The reason for launching this campaign now is to create awareness about how the product can minimise school dropout, if the family’s bread earner passes away.”

Iftikhar Ahmed, GM, Head of Group & Pension, State Life, adds that paying for quality education in Pakistan today is a challenge and several middle and upper-middle class parents are struggling to ensure that their children continue to receive such an education. Often in the event of the demise of a parent or a guardian, children are forced to drop out of the school or switch to more affordable options.

The campaign’s tagline ‘Iraadon Ki Kamiyabi’ (continue the promise of education) is apt as the product ensures that children can continue their education in the same institution even in the absence of a parent or guardian.

Most insurance companies in Pakistan have education policies with a continuity benefit built into them; State Life is the only one to offer this with a return benefit. This means that at maturity, the accumulated profit is returned to the school (minus the service fee State Life charges).

The primary target audience for the scheme are owners, principals and heads of schools. The scheduling of the premium payments is the decision of the school and State Life tailors each policy according to the budget and needs of the institution. The premium is either paid in full by the school or shared (on an agreed-upon formula) with the parents. At the end of the year, if no losses have taken place, State Life offers policyholders two ways of using the accumulated premiums; it can either be used as a discount on the following year’s premiums or taken as a lump sum to be reinvested in the school’s development.

“In this way,” says Dossa, “the product has a CSR element built-in, whereby State Life is playing a role in either helping children continue their education, even after the demise of a parent, or help in furthering the development of the education system in Pakistan by giving school heads a mechanism to save and reinvest in the development of their schools – in the form of increased teacher compensation, infrastructure development or better security.”

Most insurance companies in Pakistan have education policies with a continuity benefit built into them; State Life is the only one to offer this with a return benefit. This means that at maturity, the accumulated profit is returned to the school (minus the service fee State Life charges).

The schools that fall within the policy’s eligibility criteria are those with a good standing based on reputation, location and fee structure (as judged by State Life) and with a strength of no less than 200 students. Parents and guardians who are eligible to be covered by the school must be below 60. Dossa says that “one of the benefits of the scheme is that the premium charged per student is substantially lower compared to individual life education plans and this is an incentive for parents.”

"The print ads and social media promotions resulted in an overwhelming response from teachers and principals. We now expect other industry players to start promoting their education plans extensively as well."

Adeel Nasir, Account Director, Connect Marketing Communications

In the opinion of Tasmiah Sheikh, Creative Director, Connect Marketing Communications (State Life’s creative agency), creating awareness of education continuation insurance schemes is very important. This was the reason why it was decided to use the story of a school principal reassuring a widowed mother that she will not have to pull her child out of school because she can no longer afford the fees.

Before the TVC was aired in September, State Life ran a print ad campaign in newspapers, and according to Adeel Nasir, Account Director, Connect Marketing Communications, “the print ads and social media promotions resulted in an overwhelming response from teachers and principals. We now expect other industry players to start promoting their education plans extensively as well.”

Sheikh is of the view that such awareness-building campaigns for education insurance are required across the industry, if only because the association with the death of a loved one has created a negative image of the product. Dossa concurs: “It is important that life insurance is seen as an investment product by people and a way to secure their future.”

It is for this reason that State Life’s recent campaigns have focused on positives; for instance, retired couples using their insurance maturity to travel or to reinvest, thereby shifting focus away from the notion that insurance is only helpful in the case of adverse events.

A further challenge of selling education insurance is the lack of customer trust. Customers fear hidden charges, are averse to filling out complicated paperwork and generally lack the concept of planning a child’s education and how this would be affected in the event of the demise of a parent or guardian. However, as the Education Continuation Scheme has an annual maturity feature, which means that profits can be withdrawn every year, State Life is confident that this will make the product more attractive to schools and parents and convince them to give it a chance.