There are various types of education insurance available, so consider the following before you commit to a policy:
Term Policy: Education insurance is usually a term insurance policy. This means that you and the insurance company agree that the insurance policy will run for a set period, which will usually be the time that you expect your child or children to be in education. During this period, you make regular premium payments to the insurer. The policy then pays out if you suffer the covered events (death, illness, injury) at any point during the period. Some policies let you start making premium payments and benefiting from the protection from when your child is born, rather than waiting until they start school.
Sum Assured: Check with the insurer to see how the policy pay-out will work. Many policies work on a sum-assured basis. This means the policy will list a set pay-out amount (the “sum assured”) which applies regardless of how long you have been making premium pay-outs and the total amount you have paid before you die. In some cases, the insurer will hand over the pay-out as a single payment. In others, the insurer will pay the actual education costs of your child until the pay-out total is reached or the insurance term ends, whichever happens first.
Critical Illness and Permanent Disability: Education insurance does not only pay out if you pass away. Many policies also pay out if are unable to work as result of a medical and thus lose the income needed to pay for your child’s education. This can include permanent disabilities such as from an accident. It can also include critical illness, which is usually defined as a serious medical condition where there isn’t a treatment that would make you fit enough to return to work. Ask your insurer how pay-outs work with critical illness and permanent disability as this can be slightly different to the way pay-outs work when you die.
Funeral Expenses: Some education insurance policies offer an extra benefit in the form of funeral expenses. This means the insurer will make a payment towards the cost of your funeral if you die, helping remove some of the stresses your family will face in this unfortunate event. Ask for details as a policy may pay out a fixed amount or instead pay out a percentage of the sum assured amount.
Savings Plan: With many forms of insurance, you don’t get your premium payments back, even if you never make a claim during the period of coverage. However, education insurance has an exception known as a savings plan. This offers all the coverage benefits of an ordinary education protection policy but also means you get back your premium payments at the end of the coverage period along with an interest payment. Before signing up to such a plan, make sure you understand how much the payments will be, when you’ll get the money back and how the interest is calculated.
Term Policy: Education insurance is usually a term insurance policy. This means that you and the insurance company agree that the insurance policy will run for a set period, which will usually be the time that you expect your child or children to be in education. During this period, you make regular premium payments to the insurer. The policy then pays out if you suffer the covered events (death, illness, injury) at any point during the period. Some policies let you start making premium payments and benefiting from the protection from when your child is born, rather than waiting until they start school.
Sum Assured: Check with the insurer to see how the policy pay-out will work. Many policies work on a sum-assured basis. This means the policy will list a set pay-out amount (the “sum assured”) which applies regardless of how long you have been making premium pay-outs and the total amount you have paid before you die. In some cases, the insurer will hand over the pay-out as a single payment. In others, the insurer will pay the actual education costs of your child until the pay-out total is reached or the insurance term ends, whichever happens first.
Critical Illness and Permanent Disability: Education insurance does not only pay out if you pass away. Many policies also pay out if are unable to work as result of a medical and thus lose the income needed to pay for your child’s education. This can include permanent disabilities such as from an accident. It can also include critical illness, which is usually defined as a serious medical condition where there isn’t a treatment that would make you fit enough to return to work. Ask your insurer how pay-outs work with critical illness and permanent disability as this can be slightly different to the way pay-outs work when you die.
Funeral Expenses: Some education insurance policies offer an extra benefit in the form of funeral expenses. This means the insurer will make a payment towards the cost of your funeral if you die, helping remove some of the stresses your family will face in this unfortunate event. Ask for details as a policy may pay out a fixed amount or instead pay out a percentage of the sum assured amount.
Savings Plan: With many forms of insurance, you don’t get your premium payments back, even if you never make a claim during the period of coverage. However, education insurance has an exception known as a savings plan. This offers all the coverage benefits of an ordinary education protection policy but also means you get back your premium payments at the end of the coverage period along with an interest payment. Before signing up to such a plan, make sure you understand how much the payments will be, when you’ll get the money back and how the interest is calculated.
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