5 Education plans parents should consider for college planning
It's never too early to prepare for your child's future, especially in line with college planning. Here are some educational plans that you should consider.
Parents worry about a lot of things, but how to pay for their children’s future is perhaps the greatest worry of them all. Don't fret though as one way you can secure your child’s academic future is by acquiring a pre-need plan tailored specifically to their education.
Given several education plans in the Philippines these days – and the fears that what happened with CAP nearly a decade ago can happen again – which educational plan should parents invest in?
Here are five viable plans that can get you started with college planning:
Sun Life Financial Philippines, Inc.
The Philippine arm of the Canada-based financial service offers an insurance plan that caters to the eventual educational needs of your child. Under the Sun Dream Achiever plan, a child is guaranteed an education at the school of their choice, with the course or program of their choosing.
Under said plan, benefits include the following:
Life Insurance Coverage – basically ensures that the child can continue their education, regardless of what may happen to the payor of the plan.
Guaranteed Education Benefits – four annual payouts at the rate of 15% per year will be provided regardless of course and school chosen, the total amount will be equal to 100% of the coverage paid for.
Dividend Earnings – boosts the insurance and/or cash payouts of the insured, though this will depend on the company’s performance.
Flexible Cash Payout Options – an option to start the cash payouts will be given, either 12 or 17 years after the policy’s effective date, allowing the insured to use the payouts as stipends for their education.
The minimum face amount (or benefit equivalent) for this particular education plan is PHP 250,000, split into an annual payable of PHP 43,547.50. A higher face amount equates a higher payout.
Apart from these, the plan can be fully paid in as short a time as five years, and the application process is simplified. Other riders, such as Accidental Death Benefits can also be applied to the insurance plan.
As a company under the AIA Group, their goal is to provide financial protection, security, and a comfortable future. Under the Bright Future Invest plan, the following benefits are available to their clients:
High Earning Potential – the education plan also comes as an investment portfolio, allowing the payor to grow the fund through various investments. You’ll be able to build your college fund starting at PHP 20,000 a year.
Flexible Investment Features –This allows you to choose how long you pay the premium on the plan and on the investment. Payment plans of 3 years, 5 years, 10 years, and up until your child is seventeen is available. You can also add more money to it as you like.
Guaranteed Life Protection – additional benefits on the plan also allow for it to become a variable insurance plan.
Like Sun Life, these benefits run the gamut from accident premiums to medical benefits toward long- term hospitalization or surgery.
The minimum benefits are determined by the units one purchases, which costs PHP 1,000 each. The minimum units that can be bought is ten, making the total investment PHP 10,000. Cash payouts increase by 15% annually to make room for annual increases to tuition fees.
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As one of the leading companies in the insurance industry, they also branched out into the education plans arena with their Smart College Protector Plan, which also doubles as an insurance package. The payout generally relates to a yearly college fund for five years. Under the package, a child will have the following benefits:
Yearly College Fund – under its terms, the beneficiary will begin to receive the payout when they turn seventeen, which will finance their education and expenses related to it.
Life Insurance Protection – the child named as the beneficiary is also protected up to PHP500,000 from the effectivity of the policy until age 21.
Yearly Pre-College Allowance and Waiver of Premiums – If the payor passes away during the paying period of the policy, a Pre-College Allowance of up to P50,000 a year is payable to the beneficiary until age sixteen, and any premiums left unpaid will be paid for by the company and will be considered fully paid.
Flexible Payment Periods –a payor will have a choice of either 5 or 7 years in which to completethe payment of the premiums, and in the event that said payor should pass away before the completion, the amount remaining will be waived.
The minimum amounts for this particular product vary, and Philippine Prudential offers three Plans –Plan 100, Plan 300, and Plan 500 – which offer payouts of PHP 100,000, 300,000, and 500,000,
They do stress that they are an insurance company committed to providing a secure life for their clients, so what better way to secure your child’s future, right?
AXA Life Insurance Corp. Philippines
Another insurance company that offers education/insurance policies that are easily accessible to their
clients. Their Academic Extensials policy provides the following benefits:
Short Payment Periods – Payment is locked to five years, and includes a hassle-free auto-charge arrangement.
Guaranteed Cash Benefits – The policy’s beneficiary is sure to receive the cash benefits for four years, and the possibility of additional cash benefits or an Achiever’s Gift at the end of four years.
Given the flat lock-in of five years, AXA Life has 2 plans that a parent can choose from: PHP 1,500 per month, or PHP 3,000 per month. They also offer the option to start the payouts anytime between your child’s 10th or 17th year.
Like Philippine Prudential, the policy also includes a clause that in the event of the payor’s untimely passing – before the payout begins – those left behind will receive cash amounts each year until they receive the educational plan’s guaranteed cash benefits.
Banco de Oro
BDO also offers an education fund in partnership with Generali Philippines. The amount is locked in for five years and will automatically be deducted from your BDO account. The minimum amount you can pay off per month is PHP 1,500, though you can opt to increase it to shorten the paying period.
While it is termed as Variable Life Insurance, it provides the following benefits towards your child’s education:
Fund Accumulation and Life Insurance – When a client chooses to invest, the funds may be provided to the child after a set amount of time. You will also be provided with life insurance throughout the period.
Long-Term Savings and Investment – The program provides a potentially higher returns margin than traditional savings.
Flexibility – As the primary investor, you’ll have a variety of choices as to where to put your money for it to grow. You’ll also benefit from the advice of professional fund managers, courtesy of BDO.
Low Starting Amount – The amount you invest is at a lower amount than most and provides a large number of investment vehicles not normally available to investors.
It’s one of the more out of the box ways to ensure your child’s future education, but works just as effectively as other forms of education plans.
These are just some of the options available to you when you plan for the education of your children. You can shop around to see what kind of education plan works best for your family, and the budget you plan on setting aside. It’ll be worth it in the next twenty years.
This article was written for The Asian Parent by MoneyMax, the Philippines’ leading comparison portal for insurance, loans, and other financial products. Learn more at MoneyMax.ph.
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