An education insurance policy is a life insurance product specially designed as a savings tool to provide an amount of money for your child so that when they reach the age of 18 years, the funds can be accessed and used specifically for their higher education expenses.
This is an important policy because it enables you to start planning for your child’s future as soon as possible. It is also able to earn interest over time, thus guaranteeing the amount of money you are saving increases. The way it works is you calculate a certain premium to be paying out every month, and provided you are consistent with the payments, you shall be assured of the interest earned on the sum assured.
If you opt for a payor benefit rider, the education insurance policy will provide an assurance cover that in the event that the policy owner (The Parent or Guardian paying the policy) dies the child will have access to the funds to help finance their studies and usually the premiums shall be waived.
When you are choosing an education insurance policy always consider:
- How much money you want to set aside for your child’s education
- Define your goals for your child’s education: such as; the place of study, university of choice and length of study
- An affordable premium that you can pay consistently and comfortably
- A flexible policy that you can keep adding to the premium in the future
- Ensure your policy has the payor benefit rider option
There are two basic types of education insurance policy plans:
- Endowment policy
- It enables you to combine a savings component with your protection coverage
- They can be participating or non-participating policies
- Investment-linked policy
- It combines the elements of investment and protection based on your requirement as the policy owner
- It offers flexibility in that you are able to increase or top up your monthly premium contributions
- It allows you to choose the type of funds that your money will be invested in
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