For parents, providing the best education for children is a necessity. In preparing the education fund, parents should discuss in advance about which school to go to. For example, whether public schools, national schools, or even international schools. For higher education, whether to study at home or abroad. You and your partner can do a survey to schools of interest or consult with financial planners who have research needs education funding. After that, you can calculate the need for education funding and how to achieve it.
Preparing an education fund for children should adjust to the level of school needs. In principle, for 1 child, there will be preparations to enter kindergarten, elementary school, junior high school, high school, and tertiary level. Thus, parents must have a different strategy, namely saving and investing. In addition, parents also need to think about the certainty of an education fund for children by protecting from the risk of losing their source of income due to breadwinners dying. To achieve these financial goals, of course, parents need to consider product choices for children's education funds. Which one to choose: education savings or education insurance?
Savings is a product that can maintain the integrity of the initial capital. Savings will yield returns, but the results can be guaranteed at the beginning which usually is equivalent to the reference interest rate. Meanwhile, a life insurance policy is a protection product to protect family finances if the head of the family who is the source of income dies or suffers from total permanent disability. For parents who choose to buy products with two benefits at once because of practicality, then there are two choices that can be considered.
First, education savings. Education savings are term savings products that usually last 1 year or more, where parents will deposit funds every month until a certain period. In addition to getting savings benefits, parents who are considered insured also get life insurance protection benefits. The usefulness of this life insurance is that savings deposits will continue, even if there is a risk of death for parents. So, children will get the certainty of savings funds that will be used for their education funds later.
Second, conventional education insurance. An education insurance policy is basically a combination of term life insurance products with added savings benefits. The main feature is a life insurance policy that will pay the sum assured if the insured, usually the parent, dies before the child enters the tertiary level. An additional feature is that there is a pooled savings benefit balance. From the savings balance, the insurance company will spend a certain amount of money when the child enters elementary school, enters middle school, enters high school, and enters college. So, if the parent is still alive until the insurance policy ends, the child only gets a portion of savings in the form of the promised payment plus a bonus if any. Please understand that the education insurance described in this article is not unit-linked insurance.
Every financial product must have pluses and minuses, depending on the needs of the family. Educational savings have flexibility in determining the duration because parents are free to save for a period of time how many years. Thus, parents can combine education savings with other types of investment as well. In terms of education insurance, parents will usually be more fixated with the duration of a long-term contract until the child enters tertiary education. However, the plus point of education insurance is that it provides certainty for funding for educational needs for children aged 17 years, regardless of the presence of parents or not.
In conclusion, if parents still want to combine children's education funds with other investment assets, then education savings can be considered as a product that can complement the child's education funding plan. However, if parents pay more attention to ensuring the availability of education funds due to higher risk factors, then education insurance can be a consideration. Whatever the parents choose, the most important thing is to prepare education funding early. So, have you prepared a children's education fund?
Live a Beautiful Life!
Written by: Prita Ghozie from ZAP Finance
As privacy is an important aspect for the visitors of PermataBank website, PermataBank is determined to protect the visitors’ privacy. You may browse most part of PermataBank’s website without submitting any personal information. However, you may be asked to disclose certain information for PermataBank to be able to provide the service you request for. The privacy statement in this website is prepared to help visitors understand the types of information provided in PermataBank’s website, and how PermataBank handles the information.
PermataBank is the sole owner of the entire information in this website. PermataBank will not sell, share, or rent the information in this website to other parties in the manner contradictary to the aspect presented in this statement.
PermataBank will make continuous efforts to maintain the security of your personal information and protect it from manipulation, forgery, and irresponsible access and disclosure. PermataBank will also endeavor to maintain information accuracy.
This website may accommodate links to other sites. Please be aware that PermataBank is not responsible for the privacy practices of other sites. PermataBank strongly recommends website visitors to read the privacy statement of all sites that collect personal information. The privacy statement in this website applies only to the information presented in this website.
PermataBank reserves the rights to change the statement in this website at anytime. PermataBank suggests the visitors of this website to recheck the privacy statement from time to time and learn a number of new privacy practices or modification of PermataBank policies.
The use and content of this website are provided for your convenience. The information presented in this website is provided for you, without any kind of guarantee, either written or implied, included but not limited to the guarantee on tradeworthy goods and/or services, the compatibility for any purpose, promotion for a product without violating any rule.
This website may contain technical guidance that is inaccurate and typographical errors. PermataBank reserves the right to correct and/or modify the information in this website at any time and by any methods, without prior notice.
PermataBank is not responsible or liable for any material and non-material loss, which may be suffered by anyone or any party, as directly or indirectly resulted from the use of the information contained in this website, either in part or in entirety.
For your convenience, PermataBank can also provide some links to other sites in the Internet, which are owned and/or operated by any party. Please note that those sites are not under PermataBank control, and therefore, PermataBank is not responsible for the content of such websites.