Which Is Better Between Education Savings and Insurance?
Education is a really important matter. As parents, preparing the school fees for your children from an early age is a priority that can not be underestimated. The cost of education varies in different countries and increasing every year. In addition, the selection of high school or college can also affect the quality of the education gained by your child.
However, the cost of education is not the only problem in life that must be faced. There are still many other purposes which are also important in every second of your life.
Sometimes when you will use your money to fund your child’s school, unexpectedly, you need to spend money also for other needs. Yes, it will not be a problem if you have lots of money, but unfortunately, is not the case with everyone.
So how to prepare educational funds effectively and efficiently?
This is a very good question. However, before answering the question, for some people, having a child as a student who is educated at the favorite school is also a prestige of its own, right? Whatever the reason, it is clear, every parent still wants the best for their children. Education is the future, without the education the world will seem dark.
To start the initial anticipation of the needs of education can be done in various ways.
This time we will discuss education savings and education insurance.
As a good parent, of course, you have to plan for the future education of your child. Currently, there is a lot of financial products offered for your child’s education, but the question is whether you know which one should you choose? How do you select the financial products? Ok, let’s look at one by one.
Education Savings VS Education Insurance
Talking about the education, of course, common financial products that exist and have been very familiar with you is education savings and education insurance. Education savings, because it comes from the word ‘savings’, then this product is generally derived from banking institutions. Meanwhile, education insurance, as the name implies, issued by institutions engaged in the field of insurance.
Education insurance is an insurance product which is used for providing funds that can be used for children’s education in the future by preparing early. Insurance can be regarded as an alternative (if not exactly equal) education savings which will finance your child’s education from kindergarten to the university, it all depends on the type of insurance or savings that you will take.
In general, insurance education is divided into two parts, namely investment, and protection. Investments aim to raise funds in connection with the cost of children education in the future, whereas protection ideally aims to protect and guarantee children’s health costs when things are unexpected happens to them.
So which is best? Generally, any financial products will have advantages and disadvantages, therefore it would be very wise if before deciding to use a financial product related to the education fund, you as a parent are expected to carry projections on these two things:
1. The value of children’s education by calculating current costs
Let us take the example of an educational fund for college, assuming the current tuition fees at universities in the United States range from the USD $ 2.200 – $ 40.519 per year, depending on where your children will continue their education, then by knowing the needs of current funding, you can project the future needs.
2. Observe the historical data of the average increase in costs per year.
By knowing the data cost a few years back, then you can predict the percentage of increase in the cost of the education per year.
However, in practice relating to financial products that are offered to the society with the words of ‘education’, whether it’s insurance or savings, it turns out many weaknesses are found.
The weaknesses are the protection and management results funds earned from investments in financial products is relatively small, so it can actually make the parents do not have enough money for their children to get an education.
This is very unfortunate, considering the efforts that have been made by a parent which has earmarked a fund over the years, but ultimately must be paid to the disappointment of the funds generated short of their expectations.
Because funding of education is a something definite, you can predict nominal needed in the future, and you can also specify the time period.
Therefore, the most prudent to prepare children’s education fund is to invest in investment instruments.
You can buy financial products such as insurance or savings, according to the nature of its products.
The purpose of buying insurance is for protection only (pure insurance), while the savings that you have can be used of short-term goals, and investment aims to achieve higher results with the risks that can be managed in the long term.
By allocating funds separately in accordance with the respective designation, then hopefully, in the end, you will get the maximum benefit from financial products owned.