Making an educational box for your child is one of the best gifts you can give. There are many financial options that you can use to prepare children’s education funds, one of which is education insurance.
There are many benefits of planning a child’s education fund through education insurance. Aside from being a place to save money, it is also a life insurance that allows children to continue their education to a higher level even after the death of their parents.
Educational insurance is available in two types: conventional insurance or life insurance and life insurance with unit link functions. Both products provide protection and economic value.
The difference between the two manufacturers is that the monetary value of the endowment life insurance is generally agreed upon at the time the policy is signed. In addition, the economic value of a life insurance unit is highly dependent on fluctuations in the capital market. In order to better understand and not make wrong decisions, Here are some tips for choosing insurance for children’s education:
Calculate the need for Children’s Education Fund
You can do this by looking at the tuition or college fees you have charged for your child. After that, you can calculate the value for money by considering future needs.
For example, Rudy’s wife has just given birth to a child. This means that Rudy and his wife have 18 years to prepare for their children’s education. Rudy wants his son to study at X College, a four-year course at a cost of Rp. 150 million.
Using the future value of money formula and assuming an annual education inflation rate of 10%, Rudy calculates that the amount needed for his son’s college is IDR 420 million. You can use the Tuition Fee Calculator to calculate tuition fees.
Find out how much you save each month
Knowing the future value of money, it’s time to calculate the amount of money. Monthly funds should be allocated as needed. Rudi Rp. 420 million, assuming a 15% return, using the annuity formula for initial costs, Roddy would have to pay around Rs. It must be saved. 400,000 per month for 18 years.
Are you looking for the right education for your child?
Once you know how much money you need to save each month, start looking for child education insurance that covers Rudy and Rs. 20 million cash can cover needs and education.
Rudy needs to find a product that matches his financial ability to pay the premium. For example, for coverage and cash value of IDR 420 million, the premium charged by the insurance company is IDR 600,000 per month. Details of cash costs of IDR 400,000 and life insurance costs of IDR 200,000.
Compare multiple education insurance
If you want to buy education insurance, don’t copy this insurance Compare a lot. There are several things to consider when comparing educational insurance products, including:
Focus on the benefits each policy offers
For example, the benefits can be seen at:
- Life protection sum assured
- The economic value of education financing.
- Money exchange time.
Other additional benefits such as permanent disability compensation, excellent replacement compensation, critical illness compensation, etc.
Choose a trusted insurance company
Given that the money you need will be used over a long period of time, it is important that you find a reliable insurance company.
Credit organizations typically have the following characteristics:
- Get a good name.
- Registered with the Financial Services Authority (OJK).
- Explain information about education insurance products clearly and in detail.
With the explanation we gave above, now hopefully it will be good About education insurance. For the sake of a safe future for children, now let’s prepare ourselves to choose and arrange education insurance.