Children's education savings is one of the wise steps that parents can take to provide financial protection for their children. Apart from that, education savings are also the right choice to support children's future. Because education is an important factor for children's growth and development.
By having planned education savings, parents can guarantee that education funds will always be met when needed. So that there will be no financial problems that hinder the child's education process in the future. Therefore, education savings are the right investment and insurance that parents provide for their children.
Talking about insurance, did you know that education savings and education insurance are actually two different things? Yes, even though the two can complement each other, insurance and education savings have different goals and concepts. So which is better between the two?
To find out which one is more suited to your goals, let's discuss a little about the differences between education insurance and education savings for children below!
Children's Education Savings
Education savings is a form of investment or bank savings intended as preparation for children's education funds. Here are some important points about education savings that you need to know.
- Objective
The main purpose of education savings is to collect funds for children's education costs. The funds collected usually include preparation for school fees from kindergarten to college level and other additional courses. - Time Period
Education savings generally have a short and medium term because they are used for short-term goals as well. When compared with education insurance, education savings generally only have a savings period of 2 – 5 years. However, for the payment period, education savings are relatively shorter than education insurance. - Deposit and Disbursement of Funds
Education savings are deposited according to your abilities as a saver. Deposits are usually in the form of savings funds along with bank administration fees. Meanwhile, disbursement of funds can be done according to the time period chosen by the customer when initially opening the savings account. - Benefits and Risks
Education savings itself has benefits in the form of interest and savings which are guaranteed by the Deposit Insurance Corporation (LPS). So it can be guaranteed to be safer because the possible risks are relatively small.
Children's Education Insurance
Different from education savings issued by banks, education insurance is a product issued by insurance companies. Education insurance is financial protection for children's education funds which provides life protection for parents as insurance premium payers. Here are some important points about education insurance that you need to know.
- Objective
Education insurance aims to ensure financial protection for children in emergency situations, such as accidents or serious illness. This education fund protection can be used if the parent as the premium payer experiences certain conditions as stated in the agreement, dies or has matured. So if the things mentioned above happen, the insurance company will guarantee the child's education costs in accordance with the insurance policy agreement. - Time Period
Education insurance is more suitable for long-term goals, generally more than 5 years. The period of education insurance can be determined by the parents as policy holders, for example until the child reaches college. The choice of term will also affect the premium payment period. - Deposit and Disbursement of Funds
Education insurance is paid according to the selected premium period which consists of insurance costs, investment funds and so on according to the value of the policy taken. Meanwhile, the disbursement of funds or Sum Insured (UP) can be done in stages when the child enters education according to the provisions of the insurance policy. - Benefits and Risks
Education insurance has benefits in the form of guarantees if the parents as premium payers experience certain conditions as recorded in the agreement, die or have matured. If education insurance includes unit link or PAYDI, then the risk of fluctuations in investment value can depend on market performance.
Appropriate Recommendations for Children's Education
In order to plan for a better education and future, you as a parent must be wise and careful in choosing what is best for your child. Moreover, education is one of the essential needs that supports a child's future. Whether it's education savings or education insurance, you have to adjust it to your needs and abilities so that it can be used appropriately.
As explained in the previous points, the two have differences. If you have a child's education plan with short and medium term goals and small risks, it would be better to choose education savings. However, if you are planning for long-term goals, then education insurance could be the right solution.
As a note, it is important to know that the success rate of education insurance depends on the calculation of the child's education costs that you have planned. If the planned education costs do not match the child's education costs, then the disbursement of funds will not be able to meet these costs. So you have to consider many things before deciding to take out education insurance.
Good savings for children's education you can use both educational insurance and both simultaneously to complement your child's future educational goals. However, it would be better to consider several important things such as goals, needs and abilities before deciding. As a parent, your responsibility and wise choices can be the best investment and insurance for your child.
