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Thinking of signing up for an education plan etc? You may want to reconsider.

( The article, first posted on facebook January 13th 2020 starts on paragraph 3. Click HERE for the link to the Facebook Post. The first two paragraphs are important for context)

My country is yet to strengthen consumer protection. It is for this reason that there are products in the market that work within current and legally accepted regulations, yet their very foundation and practice amount to no more than tragedy for the working class. One such group of exploitative products are so called education plans and savings schemes presented by insurance companies. I first shared the post below on my Facebook page on the 13th Of January 2020. The number of people who shared their own experiences is nothing short of astounding. Whereas it is easy to imagine that all the victims didn’t read the fine print, the truth is that there was never disclosure of the risk of the kind of loss witnessed. Most of these Kenyans, as I understood that we were getting into a kind of forced savings in a scheme that is harder to access than banks, but sage nonetheless. It’s a no-brainer that none of us would have enlisted had we known that there was a risk of loss greater than 5%. In this case, the loss was 94% for nothing. Then there is the group that saw the plans to maturity and lost money. And the stories keep coming.

Insurance is good. I recommend that you take a personal accident cover as a pure insurance product and save your money in stable saccos or banks until we have regulations that protect consumers and the working class.

I lost 140,000 out of 154,000 to Liberty Life

So I lost 140,000 to Liberty Life, out of 154,000 I had contributed.

For a long time, I had been wary of these so called plans where you put in some money for a decade or so and you get “bonuses” and and interest and a guaranteed amount at maturity. They never made economic sense to me. However, as a means of forced saving at returns better than banks I was finally convinced to try it out. I contributed a nominal amount for just under three years. Then it occurred to me that the money could be put to more profitable use in other ventures and so I opted out. By taking that option, liberty life which at my time of joining was called CFC declared that 13,000 and some hundreds was the entirety of my entitlement out of the 154000 I had contributed. Of course none of these risks were disclosed at the sales point otherwise you know it would not have had chance of getting through. That was a few years ago. I visited liberty life as recently as this year to get clarification on the same: how this could possibly be right, legal, or fair. From their point of view, it is.

I have just seen another post by a friend on Facebook about the incessant phone calls by insurance agents selling, I assume these plans, as I still get the same phone calls to date. The most popular name they have is education plans with life insurance as a rider. My advice to anybody who’s not interested in learning from their own painful experience is to avoid these schemes like the plague. There are safer, and more rewarding ways to save for your future. Stable SACCOS for one. Layoffs have become increasingly common in out country today. I opted out of the scheme. However, there are many others who are forced to do so by tough economic circumstances. I cannot imagine how devastating it would be for these families to be told the companies would keep the bulk of their money.

Regulators on the other hand have to take their work seriously and protect consumers. I imagine I’m not the only one who’s lost money in this way. This kind of loss could break working class families and their dreams of a future with some degree of financial freedom.

There are way too many instances where consumers in Kenya are disadvantaged by inadequately regulated models.

Bottom line, now you know: this kind of “product” is one of those things you want to stay as far away from.

EDIT: The comments on this post reveal just how extensive this problem is. The number of people who have lost money in this way is just too high. Clearly, this has been a silent epidemic.

It is not uncommon in society today for victims to think that it was their fault or be blamed for missing something. Let me say that this is not normal nor the fault of the victims. Apart from the fact that the risk of loss is often not explicitly disclosed to the clients at the point of sign-up, provisions that see people lose as much as 80% or 90% of their contributions cannot be defended. They are simply immoral. I bet you that you cannot find such a provision in western countries. Proprietors of such businesses would probably have been summoned to congress or jailed.

For those of you who might not know, the insurance component of it is often presented as a rider. In any case, the same product (personal accident cover only) is often available from the same companies at less than 10% of the annual contributions.

It’s easy to say OK, fine we’ve lost money and we’ve learnt our lesson. We will not do it again. And certainly we will not. But what about our fellow Kenyans who are just starting out, who may not have access to the information we have? At this rate, if you include the teachers, the disciplined forces and business people, the cumulative amount lost by Kenyan workers to these schemes over the last 10 years runs into billions. Whatever clauses make this level of loss possible remain in existence today. How do we stop it once and for all? At the very minimum, the requirement for complete disclosure on the risks has to be documented and made mandatory.

However, things don’t just change, someone/some people have to do something practical to bring about the change. That’s us. For the sake of future generations and for the sake of our country. What is happening here is neither OK, nor normal, nor acceptable. It’s unconscionable. That cannot be an acceptable fate for any Kenyan worker in this country.

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