Why plan for education early
University fees, accommodation and living costs add up, and education costs tend to rise over time. Starting when your child is a baby means:
- smaller monthly amounts over more years,
- more time for the savings to grow,
- less pressure on your cash flow when the child is in their teens and other costs peak.
How an insurance education plan works
An education plan is usually an endowment or savings policy with a set term that matures around the time your child starts higher education. Depending on the plan, it may pay:
- cash payouts at certain ages or when the policy matures,
- guaranteed and non-guaranteed amounts (bonuses depend on the insurer’s performance),
- life cover on the child.
The key feature many parents value is a payor or waiver of premium benefit: if the parent paying the premiums passes away or becomes disabled, future premiums are waived and the plan continues for the child.
Education plan, SSPN or both?
| Insurance education plan | SSPN | |
|---|---|---|
| What it is | A savings policy from an insurer | The national education savings scheme by PTPTN |
| Protection if the parent dies or is disabled | Premium waiver available as an add-on | Some SSPN products include takaful cover |
| Discipline | Fixed premiums keep you on track | Flexible deposits |
| Tax relief | May qualify for life and education insurance relief, subject to LHDN rules | Has its own tax relief, subject to LHDN rules |
Many families use both: SSPN for flexible saving, and an insurance plan for discipline and the premium waiver. Check the latest LHDN rules for tax relief limits.
Questions to ask before you buy
- How much is guaranteed, and how much depends on bonuses?
- When does it pay out, and does that match your child’s age at university?
- What happens if you stop paying early? Surrender values in the first years are often low.
- Is there a premium waiver if the payor dies or becomes disabled?
Lulu shows you the benefit illustration and explains it line by line.