Last Updated on September 4, 2023 by Parentology
As potential parents or existing parents, one of the immediate worries you might face is the financial commitment required to raise a child. Among these, the cost of higher education often appears the most daunting.
Singapore boasts an incredibly efficient and rewarding educational system, globally recognized for its quality. As parents, we want our children to reach their fullest potential, which often implies obtaining a degree. However, the specter of our financial limitations holding them back can be troubling. So, let’s examine the possible costs that you may need to budget for, factoring in your child’s academic prowess and your preferred institutions.
Consider this: a subsidized business degree from a top-notch local university will cost around $20,000 per year. For a three-year course, this tallies up to $60,000, excluding living and accommodation expenses.
Don’t forget to account for inflation, which averages about 2.5% per year. If your child was born this year, the projected increase in costs by the time they are ready for university could be a staggering 50 – 60%.
What strategies could we employ to start saving for our child’s educational future? The most straightforward and low-commitment approach is to set aside a lump sum or regular monthly contributions into your local bank’s savings account. However, with low-interest rates, the actual value of your savings may decrease over time due to inflation (using the average inflation rate of 2.5% per year). Additionally, without a structured savings system, maintaining a disciplined approach to saving can be challenging.
An alternative solution involves establishing a mandatory education savings plan for your child. It’s important to note that starting an education savings plan represents a long-term obligation, and any interruption or cancellation could lead to substantial financial loss. However, based on our research, such a plan can be the optimal safety net to ensure your child’s educational future is financially secure. We have identified Five education plans, backed by reputable insurers, that could align with your financial goals.
Best Children Education Plan 2023
Etiqa Enrich Flex
The Etiqa Enrich Flex offers both flexible withdrawal options and breakeven on the 15th year (Guaranteed) as well.
- Flexible Premium Term: Opt for a regular premium duration of 10, 15, or 20 years based on your financial goals and budget.
- Flexible Cash Value Access: Enjoy the flexibility of withdrawing your funds whenever necessary. Cash value starts accumulating from the first year. However, it is advisable to withdraw after the 15th year for optimal returns.
- Secondary Life Insured (SLI): Have the option to appoint a secondary life insured for continued wealth accumulation. The policy lasts until the primary policyholder’s 100th birthday and continues to act as a wealth-accumulating tool for the SLI, even in the event of the primary policyholder’s death.
- Maturity Lump Sum: Receive a lump sum cash value at age 100, which includes both guaranteed and non-guaranteed yields and bonuses.
- Capital Guarantee: From the 15th policy anniversary onwards, your capital is guaranteed, regardless of your premium term.
- Early Break-Even: Your total premiums paid (capital) will break even at the 15th year of the policy, regardless of the premium payment term.
- Protection: The policy provides coverage for death, total permanent disability (up to age 70), and terminal stage illnesses.
- Guaranteed Issuance: The plan’s issuance is guaranteed with no need for a medical check-up or health underwriting procedure.
China Taiping i Saver 8
If you’re looking for an Education Savings Plan with a short maturity term, the China Taiping iSaver 8 might be a perfect choice.
- Payout Structure: This policy matures in the 8th year, offering guaranteed principal plus non-guaranteed bonuses.
- Short Maturity: The key benefit of this plan is its quick maturity period. At only 8 years, it’s unmatched in the market for its short Regular Premium (RP) endowment.
- Payment Term: The payment term is just two years, with an option for a lump sum payment.
- Payout Option: You receive a lump sum payout at the end of the 8th policy term.
- Underwriting: Guaranteed issuance is provided if no optional riders are selected.
- Principal Guarantee: Both the principal and interests are guaranteed at maturity.
Despite its advantages, this plan is straightforward with no additional options for policy payout term.
China Taiping i-Cash (III)
- Flexible Premium Term: Choose a premium term of either 5 or 10 years based on your individual preferences and financial circumstances.
- Guaranteed Annual Cashback: Receive a guaranteed cashback of 1% of your basic sum assured, which is competitively positioned in the market. This cashback is disbursed from the end of your premium term until age 84.
- Breakeven in 3 Years Post-Premium Term: Enjoy the assurance that, three years after the premium term, the guaranteed surrender value will match your total annual premiums paid. This value will continue to grow, irrespective of the annual cashback payments.
- Maturity Payout at Age 85: Receive a lump sum maturity payout at age 85, which includes both guaranteed and non-guaranteed components.
- Guaranteed Acceptance Regardless of Health Condition: Enrollment in this plan is guaranteed with no requirement for a medical check-up or health underwriting questions. It is open to all, irrespective of health condition.
If you’re looking for an Education Savings Plan with a flexible maturity date, the Singlife ChoiceSaver might be a suitable option for you.
- Payout Structure: You can opt to withdraw a lump sum between the 10th and 25th year or at the age of 99. This flexibility allows you to potentially structure it as a legacy plan.
- Accidental Death Benefit: In the unfortunate event of the Life Assured’s accidental death, the plan provides an additional 100% Sum Assured.
- Retrenchment Benefit: The plan provides an Interest Waiver for up to 12 months if the policyholder becomes retrenched or unemployed.
- Secondary Life Assured: The policy allows you to appoint a secondary life assured to pass the accumulated benefits to your loved ones.
- Payment Term: It offers various payment terms, including 5, 10, 12, 15, 18, 20, and 25 years.
- Payout Options: You can opt for a lump sum payout upon maturity. The plan can also be structured as a flexible maturity plan with maturity at age 99.
- Underwriting: The plan comes with guaranteed issuance provided no optional riders are selected.
- Principal Guarantee: Both the principal and interests are guaranteed at maturity.
- Riders: It offers Easy Term, Payer Waiver Rider, and CI Premium Waiver riders.
Despite these benefits, there are some factors to consider. The plan does not allow for partial withdrawals – only full surrender or lump sum at maturity. Additionally, the benefits provided in the event of retrenchment or unemployment are relatively limited.
Securing the best education savings plan for your child’s future is a significant step
Here’s what you should do next:
- Evaluate your financial situation and goals: Understand your current financial position, consider the future expenses and the type of education you envision for your child.
- Research and Compare plans: With the key features and summaries of the top 5 plans already provided, delve deeper into each plan. Visit the insurer’s website, read the policy terms and conditions, and pay attention to the details.
- Seek professional advice: Connect with our experienced financial advisors. They can provide personalized advice tailored to your specific needs and financial goals.
- Get Quotes: Request quotes from different insurers to compare premiums and benefits. Our advisors can help you with this.
- Make a Decision: Based on your research, professional advice, and personal needs, choose the best plan for your child’s future.
Remember, the earlier you start an education savings plan, the more time you allow your money to grow.
Choosing the right education savings plan is paramount in ensuring a stress-free path to your child’s higher education. With different features such as flexibility, protection, capital guarantees, and more, the best plan will depend on your unique needs and circumstances.
Our experienced financial advisors can provide guidance and help tailor a solution to suit your individual needs. Don’t delay in securing your child’s future. Reach out to our financial advisors today for a personalized financial planning session.