As we are both aware, the cost of obtaining an education in this day and age is not something that can be described as being inexpensive. The fact that the price of education has gone up on a yearly basis is a phenomenon that takes place in the industry. Most of the time, the annual rate of inflation for the cost of education is between 10% and 15%. In addition, due to the fact that it is calculated based on the degree of education, this education fee must be paid for an extremely extended period of time. Specifically, it must be paid for 6 years of elementary school, 3 years of junior high school, 3 years of high school, and 4 years of college.
But you shouldn’t be concerned about that at all! The expense of education may be high, but it is something that can be planned for in advance, so even if it is expensive, it is something that can be done. One of the numerous things you may do to organize cash for your education is purchase education insurance, which is only one of many options.
Various Forms of Educational Coverage
There are now two different kinds of education insurance available in Indonesia. These are the endowment insurance policies and the unit link insurance.
1. Dwiguna provides education insurance (endowment).
This type of education insurance is a hybrid product that combines protection from life insurance with instruments from the money market. If either parent passes away or becomes totally disabled, the insurance policy will pay for the child’s continued education, even if they are unable to earn a living in the future. In addition, the outcomes of instruments that are traded on the money market, such as deposits, have a tendency to produce a specified yield value, which can be withdrawn within a specific amount of time. The sum is accurate when compared to the terms of the contract that the customer and the insurance provider have come to an agreement on.
2. Unit Link provides education insurance.
This particular variety of education insurance is likewise a hybrid product that brings together life insurance and financial services. In addition to safeguarding the future of children’s education, the monthly premium that is paid will be managed for investment goods such as mutual funds. The returns on the investment will be doled out in stages, each coinciding with a different stage of the child’s educational journey, such as when the youngster starts kindergarten, middle school, or high school. Even while there is the potential to earn high returns or investment returns on savings, there is also a substantial amount of risk involved in making any investment. This is something that needs to be realized, despite the fact that there is an opportunity to do so.
Advice Regarding the Purchase of Education Insurance
Now that you are familiar with the two distinct categories of school insurance, let’s have a look at some helpful hints about the selection of education insurance:
1. Estimating the Cost of the Required Education
First, you need to calculate the whole cost of the education that will be required before you can even begin to hunt for suitable education insurance. It is important to take into account every aspect of the costs, beginning with the registration or entry fees and continuing through the monthly tuition fees, fees for extracurricular activities, fees for books, fees for uniforms, fees for transportation, and any other fees that may be incurred all the way through graduation. It is necessary to take into account the inflation that occurs in order for the investment value that we are currently planning to be able to offset the increase in the cost of education for education costs that are sufficient in the future or whose duration is greater than ten years, such as the cost of higher education. This is because the cost of education is expected to continue to rise in the future.
2. Consider your financial situation as well as your ability.
After you have determined the required expenditures for the schooling, you should then determine how much money you are able to put away without feeling uncomfortable and what financial dangers you will face when you purchase the insurance policy. Education insurance is a type of long-term insurance, and it’s important for families to have it so that the premium payments don’t get in the way of them being able to support their families financially or stop them in the middle of the road.
3. Make a Wise Choice When Selecting an Insurance Provider
After that, pick an insurance provider that has a history of providing solid service and is reputable. Every insurance provider offers perks and drawbacks that are unique to their business. It is possible to conduct some research in order to compare the various educational insurance products offered by insurance firms. Make your decision with great care and deliberation so that you won’t have any regrets in the future. Choose an insurance provider that has been authorized by the Indonesian Life Insurance Association to issue agency certificates, as well as one that has been authorized, registered, and overseen by the Financial Services Authority. This is the most crucial consideration.
4. Read over the terms of the insurance policy.
After deciding on whatever type of insurance coverage you are interested in purchasing, it is a good idea to review the policy’s terms and conditions in order to ensure that you fully understand them. Get familiar with all of the rights and responsibilities that customers and insurance companies have. Check that the name of the insured, the amount of the premium, the amount of the sum assured, the length of the insurance, the cost of the insurance, investment instruments, and other facilities all match what was agreed upon by both parties.
Why it’s important for kids to have education insurance and why it’s important for parents to have it
Everyone here acknowledges that being a parent comes with a lot of obligations and duties. One of these responsibilities is to ensure that children have access to quality educational opportunities. Providing insurance for the education of children is one way to accomplish this goal.
Many parents are beginning to think about purchasing education insurance for their children in order to provide a more beautiful and planned future for them, regardless of how large their financial level may be, as a form of anticipating the increase in the cost of education. This is done in an effort to provide a planned future for their children. This is the primary reason why they cannot contain their excitement about purchasing the insurance policy. The fundamental idea is that they will turn over cash to independent parties, specifically insurance companies. This organization is responsible for getting these funds and giving them to children when they reach a certain age or grade level.
Three Benefits of Having Education Insurance
At least these three reasons should be enough to convince you that your kids need education insurance.
1. Ensuring that more funds are set aside for education
At this point, you might be wondering: What is the difference between establishing a fund for your child’s education and purchasing education insurance by saving traditional money in a bank? Why should people go with this particular brand instead of something else?
It is important to keep in mind that purchasing insurance is not the same as putting money away in the bank. This is the first thing you need to keep in mind concerning insurance. If you purchase education insurance, the insurance provider will handle the management of your child’s education fund in the event that something unfortunate happens to either you or your child. If you only save money for your child’s education in a bank whose finances are solely in accordance with the amount you have saved up to this point, this scenario will play out differently.
2. Steer clear of the “Roller Coaster” economic system.
The economic structure of every nation, including Indonesia’s, is subject to periodic shifts, which is yet another reason why it is essential to place your financial assets in the care of professionals who specialize in insurance. Because of this, the possibility that inflation will cause a drop in the value of the currency is made even more likely.
In addition, there has been a significant rise in the price of a university education in Indonesia. According to information provided by the Central Statistics Agency, the education sector in Indonesia saw an inflation rate of 3.81 percent as of the month of February 2020. Indeed, the overall cost of attending schools and universities in the country rises by 10% to 15% per year.
Imagine that your child will be seven years old in the year 2020, and that the expense of attending a private university will have reached Rp. 15 million per year at that point. Simply do the math to see how much it will cost when your child reaches the age of 18, or in 11 years from now.
Therefore, when you begin purchasing products related to education insurance, things will naturally be different for you. Your money will not only be safe from inflation, but it will also be easy for your kids to use in the future.
3. It is not possible to withdraw the money directly.
This is also the difference between regular savings and education insurance, and it has to do with the withdrawal period, which cannot be done prior to the contract’s agreed-upon time. Even if the owner doesn’t have the key to access the vault, having it set up in this manner is analogous to having a safer vault.
Do you still have questions about whether or not it is a good idea to purchase education insurance for your child after reading about the various advantages and benefits of education insurance that have been described? If you start saving for your children’s education when they are still young, you can ensure that they will always have access to quality educational opportunities in the years to come.