Education Costs Soaring? Is Insurance the Answer?

Uzone.id – In the last few years, the phenomenon of child-free has developed in the global order. Phenomenon childfree It is a lifestyle for married couples not to have children. 

This phenomenon is proven by the decline in birth rates which continues to decline, even causing several countries to experience a population crisis. 

There are several reasons why couples choose not to have children, one of which is economic factors. Couples feel afraid of not being able to provide the best for their child’s future. 

“Education insurance is a valuable tool for parents who want to provide the best education for their children. It can help parents to plan and finance their children’s education more easily,” said Annamaria D’Hulst, Director of the European Parents Association.

The biggest aspect of the economic factor is providing the best education for your child. On the other hand, education costs continue to increase and become more expensive from year to year.

This is where the important role of education insurance is, which can be a solution to cover increasingly expensive education costs. 

“Education insurance can help to reduce inequalities in education. It can help ensure that all children, regardless of their socio-economic background, have the opportunity to reach their full potential,” noted Secretary General of the European Trade Union Confederation, David Willems.

It’s true, education insurance can be one solution to cover increasingly expensive education costs. Here are several reasons why education insurance can be the right choice:

First, inflation is felt each year meaning education costs and other costs go up. This therefore means that education insurance acts as a protector from inflation because it enables the locking of the premium at the time of purchase of an insurance policy. Therefore there is no worry about the cost of education in the future going up.

It should also be noted that tuition and related fees are an ever-increasing type of expense as they depend on inflation. Concerning inflation, a single can safeguard from going high because when purchasing education insurance, the premiums are fixed at that price. What this implies is that you can be sure that costs related to enhancing the level of education can also not skyrocket in the future.

Then having education insurance can also ease our minds a little as parents because at least we know we are secure concerning the future with costs steadily rising, our children are safeguarded.

Education insurance can also have an implicit positive impact on the objectives and direction of children’s education because, based on the idea of an insurance policy, it is possible to select the insurance policy designed to provide for the intended education costs based on the interests and needs of children.

Subsequently, in some countries, one can also buy education insurance premiums on credit and cut social security contributions to income tax. Thus we can set aside money to cater for taxes.

Some of the education insurance products available also provide an investment idea, so that the money, that we set aside in insurance, will become more lucrative for us.

In fact, in the global market currently, there are at least two types of education insurance, namely dual purpose insurance, and unit link insurance.

Throughout the world, there are at least 2 types of education insurance, namely endowment insurance and insurance unit link.

1. Dual-Purpose Education Insurance (endowment)

This education insurance is a combined product between life insurance protection plus money market instruments. Insurance will cover the child’s education costs if the parents are no longer able to earn a living due to death or total disability. 

Apart from that, the results of instruments in the money market such as deposits tend to provide a definite return value, which can be cashed out within a certain period. The amount is by the contract agreed between the customer and the insurance provider.

2. Education Insurance Unit Link

This type of education insurance is also a combination of life insurance and investment services. The premiums paid each month will not only protect the child’s educational future but will also be managed for investment products such as mutual funds. 

Profits from investments will be distributed along with the child’s school stage, for example when they enter elementary school, middle school, or high school. 

However, it is also necessary to understand that every investment has a risk In itself, even though there is an opportunity to get high returns or investment profits on top of savings, behind that there is also a high risk.

After we know the functions and benefits of education insurance, now is the time to find out tips for choosing the best education insurance.

1. Calculation of Required Education Costs

Before starting to look for appropriate education insurance, we must first consider determining the extent of the education costs needed. All aspects of costs must be taken into account starting from registration fees or starting fees, monthly tuition fees, extracurricular fees, book fees, uniform fees, transport fees, and others from the time you enter school until you graduate. 

For educational costs that are sufficient in the future or have a duration longer than 10 years, such as university education costs, inflation should be taken into account so that the value of the investment we are currently planning can offset the increase in education costs.

2. Evaluate your financial capabilities

After determining the required educational costs, we should also consider measuring how much money we can comfortably set aside and what financial risks we will face when purchasing this insurance product. 

Education insurance is a type of long-term insurance, so don’t let premium payments disrupt your family’s financial condition and prevent premium payments midway.

3. Pay Attention to Flexibility

Choose a product that provides flexibility in premium payments and benefits, so you can adjust it to changes in your finances and needs in the future.

4. Choose the insurance company wisely

Next, choose an insurance company that has a good track record and is trustworthy. Each insurance company has its advantages and disadvantages. 

We can do a little research to compare education insurance products between insurance companies. Choose carefully and thoroughly so that there are no regrets later.

5. Review the insurance policy

After determining the insurance product you want to buy, it’s a good idea to double-check all the terms and conditions in the insurance policy. 

Understand all the rights and obligations of consumers and insurance companies. Make sure the name of the insured, premium amount, sum insured, duration of insurance, insurance costs, investment instruments, and other facilities are by what has been mutually agreed. 

6. Consult an Expert

If you find it difficult to understand or choose education insurance products, consult an insurance agent or financial expert who can provide appropriate advice and guidance.

Providing the guarantee of a good education will be very beneficial because education gives children a sense of self-confidence and empowerment to pursue their dreams and ambitions. 

By having the right knowledge and skills, children can better face challenges and overcome obstacles.