"If you think education is expensive,
Insuring Your Child’s Future..
The numbers are enough to make you feel as if you were tumbling head in a financial free fall. RM160,000 at today’s cost for a three year University course in Australia if that is where your child will be heading. RM224,000 for a three year course in the United States. Not to mention airfare, living costs and expenses.
What is a parent to do?
Insurance may be one way to go about it, although there are of course other alternatives such as creating a trust, stocks in the child’s name, Fixed Deposits , and so on.
However, the suit for insurance is a strong one simply because it carries an element of protection as well as assurance, In the case of the latter, by adding a payor benefit to the child policy you have puchased and are paying for, in the event of your death, disability or critical illness, the insurer is obliged to waive all premium payments until the child reaches the age of 21 or maturity if earlier.
Furthermore, no one can guarantee the child’s state of health during his formative years, and there is possibility that his application for a policy may be loaded or declined due to poor health reasons.
In general, when a regular premium whole life or Endownment plan is taken on the life of the child, it would probably take two to three years for a policy to accumulate a positive cash value.
What are your Option:
The first question any parent should ask himself is what type of financial headstart he plans to give his child. is the policy or policies to be used for financing
future educational needs? Is he giving the child a form of savings for the future? Or is this to imbue the child with a life investment that will
grow at a very low premium.
Depending on which three intent proves more important to the parent, he is likely next to be asked by a Financial Planner how he feels about risks and returns, what
type of financing he is looking at, and assets and liabilities he currently holds.
If after projecting your assets against the future needs of the child (eg: education), factoring in inflation, you find yourself with a surplus, then your child is financially well taken care of.
However, if there is a projected shortfall in meeting your child's future needs, your option is to start a Plan for the children..
Example: A child age 1 month old will be able to get around RM85,000 at age 21 by saving RM300 a month for the next 9 years with a protection of RM50,000.