In the old days, parents toiled, sacrificed and saved every sen for their child’s education. Things have changed. Savings alone are no longer sufficient – they may not grow at a substantial pace, the stability and interest rates offered by banks for fixed deposits are variable and due to inflation, the value of your money may shrink over time.
The big question now is, how can parents fund their children’s education? Tuition fees for local and foreign universities continue to rise every year. News reports state that next year, several universities in Australia will be charging students RM620,000 for full degrees and up to RM660,000 for a combined bachelor of arts and medicine degree. In Malaysia, parents need at least RM200,000 in 20 years’ time, as this is the predicted cost for private colleges.
investing (eg shares, unit trusts, properties, etc). In such cases, you need to rely on your ability to make sound investment decisions. The question is, how much do you know about investing? Do you have enough money to do so? How do you safeguard your child’s education fund in the event of a market down turn or if anything happens to you?
When it comes to investing, there are always risks. But when your child’s future is at stake, it is best to be safe. The good news is, there is a middle ground for parents and this comes in the form of investment-linked policies.
Investment-linked policies are a relatively new type of insurance coverage that integrates traditional life insurance and investment. The premiums that you pay are used for life insurance protection and to invest in your choice of equity, bond or managed funds, depending on your risk profile.
Investment-linked policies are becoming an attractive option for parents today for a variety of reasons, one of which is flexibility and control. You may vary the amount of insurance protection for your child without affecting your premium, switch your investment between funds, top up your investment with lump sum payments or make withdrawals to pay for your child’s education at any time.
Investment-linked policies are managed by professionals who specialise in reading market trends and finding investment opportunities that will bring you potentially higher returns so you can build your child’s education fund faster.
Like all investments, investment-linked policies may not guarantee returns but when you are backed by a reputable company with tremendous resources, the likelihood of losing all your hard-earned money is minimal.
Besides building your children’s education fund, investment-linked policies ensure their well-being. Coverage for death, total and permanent disability, accident, critical illness, hospitalisation and surgery are usually available. What’s more, investment-linked policies allow you to attach premium payor option that will continue to pay for the premium of the policy, even when you are no longer around. This ensures that your children’s education fund remains protected.
Investing to build your children’s education fund is a serious undertaking. Make the right investment decisions today to ensure a brighter future for your children.
EXERCISE PRUDENCE ALWAYS
Regardless of which financial product you decide to opt for, always practise prudence. Do not be hasty and do your homework. Read published reports of the company, newspapers, journals and magazines, surf the internet, sign up for investment courses and seminars. Speak to the professionals (ie banks, remisiers, financial planners or insurance agents, depending on the investments you choose).