Education has become a primary need for everyone. With adequate education, it can be said that the future will be much better. There are so many jobs that emphasize a certain level of education as a condition for applying for a job. This will also affect the way we look for income.
This educational need makes many parents need to prepare for the cost of education for their children from a long time ago. Several options are available to parents if they want to ensure the future of their child's education.
Difference between Education Savings and Education Insurance
This is a frequently asked question. What is the difference between education savings and education insurance? The difference is that education savings usually have interest in three to six per cent per year. While education insurance, because the allocation of funds is in investments, the interest earned will be higher. It can range from fifteen to twenty-three per cent per year.
From this perspective, education insurance looks more promising because the benefits from interest are above educational inflation. But that advantage only applies if the results of the investment made by the company are profitable.
But if it's the other way around, it's not impossible that you have to extend the premium payment period. In other words, the risk obtained is even greater than education savings.
Education insurance is insurance designed to be used by every child entering school. This kind of insurance usually has two facilities, namely protection insurance and investment insurance. The purpose of protection insurance is so that children can still make insurance claims even though their parents have died, and it can also be for medical expenses if the child is sick.
Also, Read The Right Strategy for Preparing Children's Education Funds from Financial Experts!
When is the Right Time to Open Education Insurance?
Because this insurance is used for the cost of the child's education, it is better if parents open education insurance long before the child enters school. This is because the cost of education increases by up to fifteen per cent every year.
By opening education insurance as early as possible, we can pay premiums cheaper because the premiums are adjusted to the latest education costs. With an interest of about 15 – 23% a year from insurance and after multiplied by insurance premiums for 12 months, insurance is expected to cover children's school entrance fees in the future.
Another vital thing to do when opening education insurance is to project the new school year's expenses. By considering the increase in school fees of up to fifteen per cent per year, we can roughly calculate for yourself the number of costs that need to be incurred later when the child is about to enter school.
Also Read: Tips for Preparing Children's Education Savings, What's Important?
This calculation should be carried out thoroughly, covering all levels of children's education covered by insurance, from elementary school to college. With a careful analysis, the possibility that insurance costs can not cover the cost of going to school is reduced.
The thing to watch out for with education insurance is the nature of the investment and the level of protection for children. Due to the nature of the investment, we must be observant to see where the insurance company runs the investment.
Don't hesitate to ask for more details about this investment. Because we as ordinary people often do not understand the ins and outs and have the right to be informed about it. Another thing that needs to be discussed is the protection of children.
We need to determine the form of protection the child will receive and the cause of the claim. That way, when things go wrong, the claim becomes apparent, and it can be done without much hassle.
As parents, we are required to do the best for our children. Opening insurance must also be done carefully, and there is no need to rush because it only makes us careless in making decisions.