It’s no secret that higher education is expensive and it’s certainly not getting any cheaper what with inflation and general cost increases.
Higher Education Financing Options
So how do people pay for their children’s education with it being so expensive? There are many options to be sure, but each financing pathway comes with its own set of costs. For instance, parents can opt to pay for their children’s education by withdrawing from their EPF account but this would lead to a depleted retirement fund and a loss of a dividend earnings.
Others may consider taking out a personal loan or re-mortgaging to fund their children’s education but this too would incur interest costs. Moreover, some may not even be eligible to get financing for the exorbitant sums they would need, especially if they were to pay for the tertiary education of more than one child.
What Is An Education Policy?
There are two basic types of education plans – endowment and investment-linked policies. Endowment policies resemble a savings account with insurance benefits whereas investment-linked policies let you invest and still retain coverage.
For both policy types, a lump sum benefit is typically released upon maturity plus bonuses on the accumulated premium.
Now with investment-linked education plans, well-performing funds could earn special dividends and bonuses to be paid when the policy reaches maturity. However, it can also be more expensive to maintain whereas endowment policies typically costs less overall.