But, in performance, these two products clearly have a very striking difference. Where education insurance is actually a unit-linked product whose performance is influenced by investments such as health insurance products, then it is possible if the value is actually reduced. While education savings are more to conventional savings with certain interest. Where new customers can withdraw their funds several years later in accordance with the terms of the product.
Therefore, before deciding which product to choose, it is better to understand more about the characteristics and risks of the two products. Check out the following reviews.
Differences of Education Savings and Education Insurance
Education savings, or more familiar with savings plans, are included in term savings. That is a special financial product issued by the bank. Therefore, the education savings have been guaranteed by the Deposit Insurance Agency or LPS, which means that if there is a case like the bank where you saved the bankruptcy, the savings will remain secure. On the other hand, education insurance does not include bank products and is not guaranteed by LPS. Indeed, this Insurance is a product of an insurance company that offers its products through a bank that acts as a unit link sales agent. In principle, saving is the ideal place to keep our capital intact. Unlike the case with health insurance or car insurance whose function is more focused on two aspects, namely as a protector as well as savings and investment.
Furthermore, saving education is a product of savings futures which usually only have a period of 2 years and over. If with education savings, you must deposit a certain amount of funds each month on a regular basis until the due date has been determined. Another case if the insurance of education, in essence, this product is a combination of savings products and term life insurance. The system works by collecting funds from customers and utilizing the balance of savings as a guarantee of children's education. For example, at the time of going to elementary, junior high, high school or college, the insurer will spend some money taken from your savings balance to finance the educational needs. If the customer or the parents died, then the savings will automatically be deposited and the cost of education can still be guaranteed.
The advantages of Education Savings and Education Insurance
If you are saving on an educational savings or savings plan, then the rate of return or interest you earn would be matched by interest provisions in accordance with the agreement. So, by choosing to save in an educational savings or plan, you will earn the amount of interest that has been set and the value will not be reduced. Instead, the rate of return you get from unit-linked education insurance products is uncertain or not fixed. This is certainly influenced by investment performance and investment risk itself. For example, if you choose stock mutual funds as an investment instrument, the ups and downs of stock prices and capital market conditions will greatly affect the fluctuation of the value of investment funds in your unit link insurance.
Therefore, the return you get from unit link insurance can be lower, fixed, or even increased. But on the other hand, there are advantages that try offered by unit link insurance is the opportunity to double the savings. If you are a person of aggressive type in investing, then there is no harm in also choosing a unit-class education insurance as a vehicle of guarantee for your child's education.
Which is Better?
In Indonesia. from a research and research by ZAPFIN Research Division, found the fact that the average increase in tuition fees in Indonesia is almost 15% per year. Seeing this, it is clear that the education savings that usually only open about 6% per year of basic funding will not be able to catch up on the cost of education that is 2.5 times higher. Conversely, if you choose insurance, then there will be investment performance factors and market turmoil that makes the return so uncertain because the value of the stock can go down and rise at any time without predicted before.
Indeed, in preparing for education funds it is not easy. But it would be better if you prepare it all as early as possible. If so far you already have an educational savings, then the question now is what investment vehicle are you using? The timeframe is right or not? And so forth. In time, the success of your plan in setting up an education fund depends on the strategy that is done from the beginning. Therefore, if it should be necessary then to use the services of financial planners is highly recommended. To further assist you, here are the details of the benefits of educational savings and educational investments.
Education Savings
Suitable for savings short-term education fund, which is generally 2 years to 5 years.Because it is a saving product, then there is no large interest, but only charged administrative costs.Although savings products, but there is still a combination of insurance benefits, namely life insurance alone, excluding health insurance. In this case, if the insured dies, the heirs get the nominal amount already listed in the contract, and protect the risk of death resulting in the cessation of deposit regular deposit can be anticipated. The interest given is usually in the range of 3% to 6%.
Education insurance
Used as long-term savings, in general the saving period ranges from 10 years. This product provides more protection benefits, so not only get life insurance benefits, but also health insurance, where in case of risk of illness and should be hospitalized in the hospital, then the cost of the hospital is borne by the insurance company. Because of the partial allocation for investment, the interest given is much greater than the savings of education that is around 15% - 23% per year.
Thus the discussion of the difference between the risks of education savings and education insurance. Hopefully with this information, can add insight and your knowledge about both types of education products. So that you will not be wrong in choosing which products are most suitable for your child's education today. Therefore, be a wise parent and full of deliberate considerations in deciding everything, let alone concerning the future of your baby.
Also read: Best Education Insurance for Cildren