Are Insurance Policies Like Education or Life an Investment?

You’re sitting across from a relative, the one who always has advice. They lean in, their voice dropping to a serious tone. "You have to start thinking about the future. That child’s school fees won’t pay themselves. What you need is a good policy." They slide a brochure across the table. It’s glossy, filled with charts and promising numbers. You nod, feeling that familiar mix of responsibility and confusion. Is this just another monthly expense? Or is it something more? Are you spending money, or are you actually planting a seed for a harvest you’ll one day reap?

This scene plays out in living rooms and offices across the continent every single day. The question hangs in the air, often unspoken but deeply felt: We’re taught to work hard, save what we can, and provide a safety net for our families. But when a significant portion of your income goes towards a policy, you deserve to know exactly what it’s doing for you.

What Are You Actually Buying?

First things first, we have to get our definitions straight. The word "investment" gets thrown around a lot, and sometimes it loses its meaning. We think of an investment as something we put money into today with the expectation that it will grow and give us more money tomorrow. A business, a piece of land, shares in a company – these are classic investments. Their primary goal is wealth creation and capital appreciation.

Now, look at your insurance policy. Its primary goal isn’t to make you rich. Its core, fundamental reason for existing is protection. It’s a shield.

Think of it like this: building wealth is like building a magnificent, beautiful mud house brick by brick. It takes years of sweat and dedication. An investment is the act of adding more bricks, making the walls higher and stronger. An insurance policy is the strong, metal roof you put over that house. When the heavy rains come, and they will, the roof doesn’t add more bricks to your walls. Instead, it stops the rain from washing your entire house away. You’re not buying bricks; you’re buying cover.

So, is it an investment in the traditional sense? ... Not really. But is it a critical part of building and securing your financial future? Absolutely. It’s the foundation of any solid financial plan because it protects everything you’re working so hard to build.

Education Policy

Every parent’s dream is to hear their child’s name called at a graduation ceremony. The cost of turning that dream into reality? It’s not small. Education policies are marketed heavily as the solution. You pay a little each month, and when your child is 18, a lump sum is waiting to cover university costs.

Most education policies are essentially bundled products. They combine two things:

A term insurance component that pays out if you, the parent and premium payer, pass away or become disabled before the plan matures. This is the pure protection part, the safety net.
A savings or endowment component where your money is pooled and invested (usually conservatively) by the insurance company. Over time, it accumulates a cash value.

The investment part is that second component. The returns here are typically modest and guaranteed. You’re not going to get the potentially high returns of the stock market, but you’re also shielded from its dramatic lows. The real value isn’t in explosive growth; it’s in discipline and security.

The powerful, non-negotiable benefit is the forced discipline. It removes the temptation to dip into that fund for other "emergencies." It ensures the money will be there specifically for its intended purpose. And that insurance component? It’s priceless. It guarantees that even if you’re not there to see them walk across that stage, your child’s education will not be a casualty of your absence.

Now, that’s a legacy.

The Life Insurance Policy

This is where the lines get blurriest. "Whole life" or "endowment" policies promise a payout after a certain number of years or upon death. People often see that final sum and think, "Look at how my money grew!"

Well, here’s a less glamorous truth. You must critically look at the numbers. Factor in the total amount you will have paid in premiums over the years and compare it to the guaranteed sum you’re promised at the end. Sometimes, the difference, when spread over all those years, might be less than what a simple savings account could have offered, once you account for inflation.

The value of a life insurance policy is profoundly human, not just mathematical. Its true "return" is measured in peace of mind. It’s the knowledge that your family won’t be burdened with debt, funeral costs, or a sudden loss of income if something happens to you. It’s the capital that will allow your spouse to keep the house or your children to stay in their school.

A cousin of mine had a policy his friends teased him about, "Why waste money on something you won’t even enjoy?" Tragically, he passed away in his late 40s. That "waste of money" became the only thing that kept his family in their home and his small business from collapsing under its debts overnight. The return on that investment wasn't financial for him; it was everything for his family.

So, Where’s the Investment Mindset?

This doesn’t mean insurance is a bad deal. Far from it. It just means we need to reframe how we see it. The investment isn’t in the potential cash value of the policy itself.

The investment is in your future freedom. You are investing in the certainty of your child’s education. You are investing in your family’s stability against the worst-case scenario. You are investing in your own peace of mind today, which allows you to focus on building wealth elsewhere without the constant, nagging fear of "what if."

It’s the bedrock. You build your risky ventures, your side hustles, and your actual investments on top of this stable, protected foundation. Trying to build wealth without insurance is like building on sand. One flood, and it’s all gone.

You May Ask

1. Should I cancel my policy if the returns are low?

Cancelling a policy, especially in its early years, often means losing a significant portion of the money you’ve already paid. It’s rarely a good financial decision. Instead, see it through. The protection it offers has value that isn't reflected in the return percentage. If you’re unsure, speak to a independent financial advisor to review your specific policy rather than making a rash decision.

2. Is it better to just invest the money myself?

This is a great question for someone with the discipline, knowledge, and time to manage investments actively. You could potentially achieve higher returns. However, you lose the automatic discipline and, most importantly, the guaranteed protection. A personal investment portfolio doesn’t come with a life insurance component. A hybrid approach often works best: have a solid insurance policy for core protection and then invest separately for growth.

3. How can I tell if a policy is good for my needs?

Look beyond the bonus projections and fancy brochures. Focus on the guarantee. What is the minimum sum assured you or your family will get? Does that sum align with your goals (e.g., will it cover four years of university fees?). Understand the premiums, can you comfortably afford them for the entire term without strain? Finally, read about the claim process. A policy is only as good as the company’s reputation for paying out claims fairly and promptly. Ask around, read reviews, and do your homework.

So, are insurance policies like education or life an investment? They are, but not in the way we commonly think. They are an investment in stability. An investment in certainty. An investment in the people you love most.

Don’t buy a policy expecting it to be your golden ticket to wealth. Buy it to be the strong roof over your head, the unwavering shield for your family’s dreams. It’s the quiet, reliable foundation that allows you to take calculated risks, dream bigger, and build a legacy that lasts.

That’s a return no mere number can ever truly capture.