For you parents, have you prepared an education fund for your baby? As we both know, the cost of education at this time is not something cheap. The fact that occurs in the field is the cost of education has increased every year. Inflation that occurs for the cost of education is around 10-15%. But don’t worry about it first! Although the cost of education is expensive, the cost of education is something that can be prepared in advance. There are many ways that you can prepare education funds, one of which is Looking for Child Education Insurance Plan Malaysia.
So what are the benefits of Looking for a Child Education Insurance Plan Malaysia?
Basically, there are 2 main benefits of education insurance, namely the high inflation of education costs and the risk to parents.
Education cost inflation
The increase in school fees is no joke. According to data from the Central Statistics Agency in Indonesia, the increase in base fees alone reaches 15% per year. Not counting the increase factor from monthly SPP, uniform money, books, and others. Not to mention if you plan to send your little one to a private school. The increase in the cost of private education can reach 40% per year.
Risk to parents
Even though we love our children, we can’t always be there for our children. Especially if an unexpected and unpleasant risk happens to us. For example, the risk of retiring when the child is still in school, having an accident, falling ill, experiencing a physical disability so that he cannot support himself, to death.
How does education insurance work?
Education insurance generally has an investment element. Because of this, educational insurance tends to contain unit links (not pure insurance). How it works more or less like this:
- The customer pays the premium to the insurance company;
- Investment managers in insurance companies invest premium capital in investment instruments, such as Mutual Funds or Debt Instruments;
- The investment manager gets a return (profit) from the investment result and reports it to the customer at the end of the year;
- At the time specified in the policy, usually when the child will enter school, the customer can file a claim for the investment results and get the sum assured.
Education insurance risk
Of course, education insurance is not without risk. Where there is investment, there must be an element of risk. Therefore, make sure you at least know about the risks of education insurance before buying.
Unlike education savings
Maybe you think paying education insurance premiums is the same as saving every month. In fact, you get a profit because of the return on investment. However, any investment carries the risk of loss, either in part or in whole.
There is an additional fee
Many customers think that they will definitely get a much larger amount than you deposited through premiums. Although it does contain elements of investment that can bring profits, you need to remember that there are additional costs. For example admin fees, insurance costs, and various other types of costs.
Premium deposit extended
Imagine if you have bought education insurance where the premium deposit is short term. However, your investment has not been profitable and is not sufficient for the Sum Insured to be achieved. This can lead to an extension of your premium deposit period.
Mistakes in choosing investments
It is not impossible that the investment manager at the insurance company made a mistake. If they invest your education funds in the wrong instrument, then you are not making a profit and instead experiencing a loss.
