How to Select the Best Education Insurance
There are many ways to prepare the best choice of insurance fund children's education. Key, select the most appropriate to your financial goals.
The issue of children's education fund is always the attention of parents. The desire to provide the best often collide with the school fees (very) high. According to some research, school fees rising from 10 to 15% a year. Exceeds the property market, especially employee salaries :))
What's the solution?
One of the most popular is to buy insurance education. In addition to its aggressive sellers, this product has frills education, which may be by many parents is considered a good choice and the most appropriate name.
It is often less known, that in fact there are many solutions to meet the children's education fund. Insurance should not education.
And, importantly, that may be insurance education is not the right choice, the condition and the family's financial goals.
Therefore, you should first understand what the solution to meet the educational fund. Once understood, can determine which are the most suitable.
Unfortunately, many parents do not know or could not find information about the options - the options. So let choose, you know not.
This paper discusses any existing solutions, comparison plus and minuses of each option, and suggestions how to select it.
Investment and Protection
In terms of setting up funds for education, there are two important things that must be considered: Investment to ensure sufficient funds for school fees. Need investasikarena the high increase in the cost of education, while saving offers certainty but the result is not enough due to lack of interest. Although more risky, investments promising higher profit potential of saving.
Protection to ensure if the breadwinner of the unfortunate, children go to school smoothly. If a parent dies, accident or disability insurance protects the insured disburse money.
The behavior of parents who only focus on how to invest clearly inappropriate. Parents not only have to choose the right investments, but also must ensure that there is adequate protection to protect children and families.
Any choice
We start from the most popular.
# 1 Unit Link Insurance
Unit linked is the solution offered by most insurance agents or sellers dibancassurance. Although wrapped with many insurance terms of education, essentially a unit-linked products.
What is a unit-linked?
Unit linked insurance and investment combine in one product. Products '2 in 1' which offers convenience for participants, with a variety of options rider (rider) such as critical illness, income replacement, health and others.
Premiums paid by the policyholder unit linked investment units bought by the insurance company. The investment unit is managed by the Investment Manager in a variety of instruments, such as equities, bonds, money markets and others, chosen by the policyholder.
The results of the investment unit used to pay insurance costs and expenses - other expenses (check your policy, there is a cost anything!). The rest, after expenses such, belong to the policyholder that could be disbursed to fund education.
As insurance, unit-linked policy will be active or not lapse (non-active) for the cost of insurance and additional insurance costs (rider) paid by the policyholder. Payment of insurance costs and additional insurance costs made by cutting investment units.
Related to this, the thing to understand is as follows:
Insurance costs rising every year, although the proposal does not link unit is shown how the increase in the cost of it every year. Which is shown only the cost of insurance in the first year (no record * in the proposal regarding this matter). The implication of what? Because insurance costs paid by cutting investment unit, the pieces on the value of the investment (which incidentally is the education fund for the children) will be greater over time.
Cutting the cost of insurance of any definitive investment performance results. The investment return is uncertain, depending on the performance of the market, while it certainly cuts the cost of insurance. That's why when the performance of a market crash, the policyholder prompted to add funds (top up) because the return on investment is not enough to pay the cost of insurance. If insurance costs are not paid, the insurance policy lapse (inactive) and all the benefits of automated follow stalled.
Each additional insurance (rider) No insurance costs. It reduces the portion of the investment costs which means to cut education funding. Therefore, be sure to choose a rider that is needed.
In addition to offering convenience, it must be noted that parents who use unit-linked insurance is a possibility terpotongnya children's education funds by insurance costs. Especially if the parents only pay a certain premium to year (eg only pay 10 years) - read the explanation here. Note carefully how the development of the investment value.
# 2 Term Life Insurance and Mutual Funds
This is a common way recommended by the independent financial planners, which separates the protection and investment.
Protection is done by purchasing a term life insurance or pure insurance, whereas the investment made by placing funds in mutual funds.
Who choose this way of investment mutual funds are required to take care of themselves. Need a willingness to learn and understand how and rules. Not difficult but must be learned.
Hand protection, participants must be prepared to 'mental' buy term life insurance premiums forfeited.
The advantage of what choose this way?
Higher investment returns due to the cost of investing in mutual funds pieces small (compared to unit-linked). Even through the purchase of Mutual Funds Online, for example through IPOTFUND, free of charge purchase and sale of mutual funds. The lack of cost cuts make funds invested becomes larger.
Flexibility choose the Investment Manager. Because it is not tied to a particular insurance company, participants could freely changing investment managers. This freedom is important because market conditions are always changing and the ability of different investment managers in each sector or instrument.
Term-life insurance provides the highest value of life insurance with low premium cost. Value adequate protection is important because it guarantees adequate protection for the financial needs of school children when disaster came.
Now it is very easy to invest in mutual funds. There are mutual funds online, the minimum investment is low (ranging from Rp 100 thousand) and the auto-invest that allows the investment is done automatically. With all these facilities, does not need the help of others, all should be able to do themselves.
# 3 Defined Benefit Education Fund
Both of the above alternatives is how to achieve education funds using investment instruments. Indeed provide high investment returns, but also degkannya high-deg. Stocks can go up, but it can also ambless. High risk high return.
Not everyone is ready with the fluctuations. Especially regarding children's education fund.
There are alternatives to this, the education fund that provides benefits for sure. Certainly means that the money will be accepted guaranteed in accordance mentioned in the proposal.
Not many insurance companies that offer this type of product for the majority revolved via unit-linked investment.
One that offers a defined benefit is the product Pro-Graduate of Manulife Insurance. Under the proposal that I read, this is the solution of education funding since entering Universities to 23-year-old child.
How it works as follows:
(1) Participants saving (annual or monthly) to Manulife with flexible repayment period could have been 5, 10 or 15 years;
(2) Filing without a medical examination and no guarantee is definitely approved;
(3) When the child goes to college, Manulife made cash payments of value that is listed in the policy (guaranteed) for several years to finish college.
(4) In the event of a disaster to the parents, the premium will be followed by Manulife and the benefits of fixed cash payments will be paid until the child graduated in college or up to 23 years old.
What is the difference between this product with futures education savings also provide definitive results? There are at least three things that I look different.
First, the pro-graduate had a longer time span that since entering college, while saving education is usually the period is shorter, the longest about 10 years.
With shorter periods in education savings, difficult parents clicking the return key. Because every 5 years, education savings must be updated and when renewed interest would have been different from the previous. In pro-graduate, his return has been locked, unchanged since the beginning until the child goes to college later.
Second, the pro-graduate are tiered based disbursement college or school level, while melting in education savings done once.
Liquefaction tiered help arrange financing because it had computed the maximum number that should be taken so that the amount of money sufficient to finish college.
Third, differences in underwriting. Values education savings deposits guaranteed by the government, but its rate of return is not guaranteed by the government. Meanwhile, the return and the value of the melting pro-graduate guaranteed by Manulife.
Comparative Benefits Education Fund
Of all these options, where the best choice? What's the verdict?
To answer this, we need to see how the simulation. Let the number speaks itself!
Incidentally, I recently helped a friend discover solutions to their children's education fund. I will use this experience to show a comparison of each alternative education funding solutions above.
Look What The need
Before closing this article, I want to remind that there are two components education insurance, namely investment and protection.
From here, we see that the protection is to be provided from the insurance. But, the investment could be from anywhere. Can be purchased along with insurance, often called unit-linked, but could not.
Investments can be done by buying mutual funds, gold, property or business itself. That all is an investment instrument that can be used to prepare the children's education fund.
How if you already have life insurance? Logically, yes stay up investment. No need to buy life insurance anymore.
I often meet people who buy insurance products with investment, even though this person is actually already has enough life insurance protection, such as an office or facility of've never bought before. That is, he actually needs additional investment, not insurance anymore.
Why is this important? because by purchasing insurance products with investment, this person can not obtain optimal return on investment. Most of the money is used to pay the cost of insurance, which in fact he had had enough, the edges reduces investment portion.
Similarly, if it is to invest regularly, but do not have protection. So, this person should only need pure life insurance products (no frills investment).
Because if you buy insurance with investment return, the waste. 've Obviously got an investment, why buy again. Buy any insurance, the premium is definitely cheaper than buying an existing insurance product investment. With cheaper premiums, the money could be to improve the existing investment porsis.
If you do not have both, investment and protection, may be the one to consider taking insurance and investment products.
So, when taking a product, make sure the products in accordance with your financial goals. Not a product that mensetir, but you are choosing a product.
Conclusion
Looking for a way to realize the best funds for children's education is an important task of the parents so that children can go to school well and smoothly. To that end, this article is advice before choosing, parents learn the first choice there, to find the most great, the best.
Do not get hung up on one choice only, eg unit-linked, but compare all alternatives. We must look for the most suitable, most can meet our financial goals or needs.