Why Do You Need To Take An Educational Insurance Policy?

Educational Insurance Policy

Educational Insurance Policy In Details.

Educational Insurance Policy, Typically, education insurance policies enable parents/guardians to save up towards their kids’ college expenses. It helps to ensure that no eventuality can prevent your child’s educational progress when it matters the most.

An education insurance policy generally includes a payor benefit rider clause. This is to say that the benefiting child can access the fund in a situation where the guardian or parent in question dies or gets impaired.

There Are Two Major Types of Education Insurance Policy

They include:

  1. Endowment plans:

These are much like savings bank accounts where the policy owners accumulate funds for their child’s college education.

  1. Investment-focused plans:

Here, the policy owner doesn’t just save money. Instead, the policy includes an investment plan. The deposited fund attracts other benefits and rewards. However, note that investment-focused plans are generally more expensive to maintain.

No matter the plan type, one common denominator in all education insurance policies is that a lump sum gets released alongside an accumulated premium to the beneficiary upon its maturity.

Why Education Insurance Is Important

As already stated, an education insurance policy ensures that a child’s education doesn’t get truncated along the line by any eventuality. Ultimately, it means that a benefitting child would receive a lump sum at the maturity of the policy.

A good education insurance plan would take into consideration factors like inflation and tax issues. Thus, it ensures that the beneficiary gets the correct value at the end.

There are even some of these policies that include extended benefits – such as marriage or mortgage.

An Education Insurance Policy Helps With Managing the Cost of A Child’s Education

We all know how expensive it is now to acquire education these days. Even a basic business course could gulp as much as $5,000. So, imagine what a full college degree would involve.

How people manage these enormous costs of education would differ. While there are several options to consider, each one has its pros and cons.

One way to do that is to leverage the pension fund of the parents/guardian. But then, this would have a negative impact on the parents’ retirement years. 

Amid it all, an education insurance policy appears to be the best option among them all.

Top Reasons Why You Might Take An Education Insurance Policy

  1. You Earn Returns On Your Investment

Although the reward levels vary with different insurance firms and policy plans, there is always an ROI to earn. Some companies (such as AIA EduAchieve) could reward you with up to 15 times your money investment.

  1. It Gives You Early Peace of Mind Over Your Child’s Future Education

Most of the plans start as early as when a child is only 2 weeks old. This way, you can actually accumulate a huge fund through a piecemeal approach that you hardly feel the irk.

  1. No Eventuality Can Truncate Your Child’s Education

Due to the payor rider clauses in most educational insurance policy plans, you can rest assured that your child’s education will continue even if you happen to die or get impaired along the line.

  1. You Get Tax Relief

An education insurance policy enables you to pay for your child’s education upfront while spending less on tax.

  1. Ancillary Benefits

There are many benefits that accrue to your child when you buy an education insurance policy for him or her. For instance, it would be easier for the child to pull through while negotiating his admission into college.


Having mentioned the advantages of education insurance policies, it makes sense to also realize that it is not for all parents. For instance, if your child is up to 15 years of age, it might not be ideal for him or her. 

Again, it makes sense to note that an education insurance policy is basically a long-term financial commitment. So, you’ve got to adapt your mind to this also.

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