You probably started thinking about your child’s future when you first held them in your arms. Or maybe even have before they were born. It must be pure parental instinct to do this; as parents, we want the best for our children. We want them to be smart, successful and to reach their greatest potential in a long, happy life.
A good education may not be the silver bullet but it sure does give them a good chance in life. The challenge is, with each passing year and as they grow, we face increasing financial pressure which is made worse by failure to plan for costly necessities such as education. This is where a proper education plan comes in; to help prepare for that time when it will cost you to support their dreams.
That said, what does one need to consider when taking the important step to purchase a policy for their children’s education expenses? And even before we delve into that, do you know what an education policy is?
How Can Any Parent or Guardian Select a Policy That is a Perfect Fit for their Children?
Achieving your goal of securing their bright future would need you to start saving. But, with all things considered, saving may not be enough. Sound planning for your child’s education requires a protection element to guarantee your ability to afford the increasing costs of higher education no matter what happens. An education policy such as ICEA LION’s Usomi Bora policy can help you take that much needed next step to becoming financially prepared for their future.
What is an Education Policy?
An education policy is a life insurance product specially designed as a savings tool to provide an agreed amount of money to a child listed as the life assured upon reaching the age limit set, after an agreed period of time ( maturity) or in the unfortunate event of your demise. The parent/legal guardian who sets up the policy is referred to as the policy owner. As already stated, in the unfortunate event of the policy owner’s untimely demise, the child will have access to the funds to help finance their studies.
Here are a few factors to consider when looking to purchase an education plan for your child’s education:
The Amount You Want to Have Saved at the End of the Policy Period
The amount you would like to receive at the end of the policy period is called a maturity benefit. It is usually an accumulation of all your deposits and interest declared every year and/or at the end of the policy period. In order to determine a rough estimate of what is an ideal maturity benefit, you can look at the school and college/university you’d like your child to go to, what course you envision they would like to enroll for, upkeep and inflation. It is from this amount that the insurer helps to calculate your periodical payments into the policy, also called Premiums.
How Much You Can Afford to Pay
While the amount you would want to save up for a specified period is important, it is not until the premiums are determined that you can make a decision to start. A good way to ensure you can sustain a policy till maturity is to ensure that the monthly, quarterly or annual payments into your policy are what you can afford for a long time. This is not to say that it is bad practice to sacrifice a bit more for the little ones – as long as you can put away something for them and still manage to live a good quality of life
The Plan’s Flexibility:
Education policies by design do not allow you to withdraw midway through the policy period. The flexibility referred to here is therefore in terms of other features of the policy. For example, will the policy allow you to revise your premiums downwards ( if things got thick) or upwards ( if you stumble upon a fortune); does it offer you a waiver of premium in case of death or disability, among others.)
The Duration of the policy:
The length of time you want to save is a critical pricing factor as is your age at the inception of the policy. We should all aim to start when the children are still young, so that you can pay affordable premiums over a long duration. However, if this information comes to you much later in the process of parenting, you can still structure a timing that is bearable. A good rule of thumb is to structure your child’s policy to begin to pay out when they are going to a different level that may call for more money. A policy that gives you payouts after a few years is also a good option to consider if you are someone who would like a little motivation along the way.
This list is not exhaustive but it helps to point you in the right direction. These pointers put you at a good place to engage an insurance company on a suitable education plan for your children.
At ICEA LION, we call our education plan Usomi Bora. ICEA LION Usomi Bora is designed to enable one to save up for their child’s education and pays out the agreed amount at maturity or in the unfortunate event of a parent’s or guardian’s demise. The plan can be structured to give you payouts in the course of the policy.
If you wish to learn more about education plans or the ICEA LION’s Usomi Bora Education policy in particular please contact us on 0719 071 999 or email us at email@example.com