There is value in preparing for your child’s future. You may not fully appreciate it now, but when the time comes, you’ll thank yourself that you prioritized getting an educational plan for your child.
Education is increasingly expensive. Tuition fees increase by 10 to 15% every year for colleges and universities.
If you’ve just started a family, chances are tuition fees more than doubled by the time your child enters university life. The education department asserts that the cost of schooling would increase in the coming years. Your plans will be compromised if you intend on sending your child to the best schools. But of course, you’d want what is best for him or her.
It pays to invest in an insurance product that ensures a brighter future for your children. Below are some things to know about the educational plan in general.
What Is An Educational Plan?
An educational plan provides guaranteed cash benefits that can be used to cover school expenses. These include tuition and miscellaneous fees, books, and other learning materials. The plan may also cover local and international internships if required.
Educational plans are flexible. The available terms are 5, 10, 15, and 20 years. Some plans are a rider to life or health insurance policies. In other cases, it is a standalone policy that is also investment-linked.
The policyholder is also entitled to withdrawable dividends, aside from the savings intended for the policy bearer’s school purposes. The policyholder or the payor is usually the parent or guardian who would shoulder the monthly contributions while the bearer is the beneficiary.
Educational policies vary in features. For instance, an insurance company offers guaranteed cash gifts as soon as the policy bearer graduates. Others waived the payment of the remaining terms when the payor met his or her sudden demise so that the beneficiary can still fund his or her schooling. The plan can fill the gap and ensure the bearer’s educational future.
VUL As An Educational Plan
Variable universal life (VUL) insurance offers life protection and investment. The latter can be utilized as an educational fund.
A part of the monthly premium goes to mutual funds. This can be in the form of bonds, equity, balanced, or money market funds. Every insurance company has a pool of wealth managers whose role is to ensure that the investments grow through the years.
You may set aside or spend the returns however you wish—whether it be an educational or retirement fund.
The policy also remains enforced for as long as you are paying the premiums, which also means continuous investment growth.
Why Invest In An Educational Plan
Planning Early Means More Savings In The Future
As with other insurance products, monthly premiums are always lower when both the policyholder and the beneficiaries are longer. When you purchase an educational plan as soon as your child is born, the premiums are cheaper.
This is especially helpful if you plan or already have more than one child, a single parent, or had the child later in life. You’d easily pay premiums for two educational policies at a fraction of the amount than you would for a single plan for older kids or teenagers.
When the time comes, you don’t have to take out a loan at a higher interest rate because the educational policy would provide for your children’s educational needs.
Investment-Linked Plans Have Higher Growth Potential
Educational plans for university are geared toward the long-term. Unlike the money you put on a bank account with minimum interest, your investments with this policy grows at an average of 10%. The returns are maximized the longer the investment stays intact.
Not to mention, the value the investment has incurred over time will not be eroded by inflation.
So this plan is an opportunity to beat the challenges of saving for your children’s future. You may keep up with the rising costs attached to the availing of quality education. This is true, regardless of where you are in the world.
The Plan Offers Flexible Financial Benefits
Either you purchase a standalone educational plan, or as an add-on to an investment-linked policy, you are entitled to the death benefits and cash value. Private school isn't frugal!
Nonetheless, if the family had an emergency and cash is tight, some insurance companies offer withdrawal options. You may also choose to borrow against the cash value of the policy without affecting other benefits.
The plan then offers an extra layer of protection to keep the family financially secured, albeit the temporary setbacks.
A cliché, but being unprepared has its price. The sad part is you are not the one who is going to suffer the consequences—your children as students. Not trying to sound like an alarmist, but if you are not going to do something for their future now, chances are, the future is bleak for them.
Would you rather plan now while finances are still manageable and savor the feeling of witnessing your child graduate in college or ignore this all-too-important advice? That is your call to make.
