Q: What’s the best age to start an education endowment plan for my children? I have two boys, 2 and 4.
A: In planning for your children’s education funds, these are some factors to consider: where would you like them to further their studies, when will they need the money, your current financial situation and your risk appetite. The earlier you start the plan, the lesser you are required to outlay in premium.
Endowment insurance provides both protection and savings. The policy normally pays the sum insured and any bonuses you have built up at the end of the set period of time (maturity date), when you die or become totally and permanently disabled (if this benefit is provided) if it happens during this period. The protection coverage will be on the life of your children if the endowment plan is taken out on their lives. In addition, some plans allow riders to be added on to waive off the future premiums should any mishap occur to the payor, i.e. premature death, totally and permanently disabled or diagnosed with critical illness.
Besides endowment, Investment-linked plan (ILP) is also commonly used in planning for children’s education needs. The premiums paid will buy life insurance protection and investment units in a managed fund. The price of the units depends on how the investments in the fund perform. What it pays depends on the price of the units at the time you cash it in.
Speak to your financial planner. He/she will be able to make the recommendations based on your current financial situation, preferences, objectives, risk appetite and time horizon.
If you would like to make an appointment with me, feel free to contact me at 96386328.
This commentary expresses the views of Phylise Er Jia Li, CFPcm representing AXA Life Insurance Singapore Pte Ltd. It is not made with regard to specific investment objectives, financial situation and particular needs of any person and is not to be construed as offers to sell or the solicitation of offers to buy any investment product. Any past performance if indicated is not necessarily indicative of future performance. Potential investor may wish to seek advice from a financial adviser. In the event an investor chooses not to seek advice from a financial adviser, the investor should consider whether the investment product is suitable for him.
The precise terms and conditions of the plan are specified in the policy contract. Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value may be less than total premiums paid. Buying health insurance products that are not suitable for you may impact your ability to finance your future healthcare needs.