Education insurance to protect your child's study costs: what you need to know

Your child is eight years old now. School studies are going on. Have you thought about how much it will cost a few years later, in secondary school, higher secondary school, and then university? The money that covers your child's education today may not even cover one semester of university in 10 or 15 years. On top of that come the costs of books, transport, housing, tuition and many other things.

Many middle-class parents save in banks thinking about their children's future, while others invest in various savings schemes. But if the earning member of the family suddenly dies or becomes permanently disabled, how far will that savings plan hold? If the regular income stops, who will take responsibility for the cost of the child's education?

Education insurance can be the answer to these worries. The main feature of education insurance is that it is both savings and security. If premiums are paid for a fixed period, a fixed amount of money is received when the term ends. This money can be spent on the child's education.

Even if the policyholder, usually the father or mother, dies, the policy continues. As a result, the student's education continues even in the midst of such a crisis in the family. The money is given to them at fixed intervals.

Although the country's economy has grown, government spending on education has not increased comparatively. As a result, the cost of education keeps rising. Even though textbooks are free in government institutions, the other costs of education cannot be avoided. Parents have to spend regularly on tuition, coaching, books, notebooks, clothes, transport, examinations and other incidental expenses.

Many students now have to go to coaching centres. Parents spend large sums of money on this. And if the child does not study in a government institution, the cost is even higher. Especially in Dhaka and other big cities, the cost of educating a child in a private school is not small. It is seen that in Dhaka, a secondary-level student costs 15,000 to 20,000 taka a month. So having protection for education costs can bring relief to a family.

There are several things to keep in mind when taking out insurance. They are: the credibility of the insurance company, the type and benefits of the policy, the premium and payment method, the return or savings benefit, the rider (additional benefit) and the benefit after death.

There are also things that must not be done when taking out insurance, such as deciding only after listening to the agent—read it yourself and ask questions; signing without understanding the premium and profit calculation; signing a form without reading the documents; and the nominee's field must not be left blank.

Most importantly, the difference between insurance and bank savings must be understood. Insurance gives people security—that is, insurance protects you in certain specified events—along with some savings. A bank, on the other hand, will not give you security; it will give only savings and profit. A bank gives no benefit for the death or accident of a customer.

Several mainstream companies in the country offer education insurance. The state-owned Jiban Bima Corporation, Delta Life Insurance, MetLife Insurance Company Limited and almost all other companies provide this service. Here, the father or mother, as the policyholder, deposits the premium money for a fixed term. At the end of the term, a lump sum is given for the child's education costs.

And if the guardian dies during the term of the policy, the remaining premiums are waived. No more money has to be deposited. At the end of the term, the child receives the full amount. In some cases, a fixed amount of money is given as assistance immediately after the guardian's death.

Delta Life Insurance's website says that at the end of the policy term, or in the case of the policyholder's untimely death, money will be paid every four months as an annual allowance from the deposited amount. Since the cost of education rises every year, the amount of this annual allowance will also increase at a compound rate of 7 percent every year, so that the child's needs can be met in line with time.

About MetLife's education insurance, it is said that if the policyholder unfortunately dies, the benefits given are: 1. After deducting any liabilities, the full sum assured will be paid as a lump sum. 2. To keep the child's education going, a benefit at the rate of 2 percent of the sum assured will be paid every month until one month before the maturity of the policy. 3. The policy will remain in force until the end of the insurance benefit period. All subsequent premiums of the policy will be waived, along with the maturity benefit.

Guardian Life, a new-generation insurance company in the country, does not have direct education insurance. But it offers child protection insurance. If the premium payer (father or mother) dies before the maturity of the policy while it is in force, the child will receive several special benefits. In that case, 15 percent of the principal sum assured will be paid as a one-time cash amount. In addition, a scholarship of 1 percent of the principal sum assured will be paid every month until the end of the insurance term. All future premiums will also be waived. At the end of the term, the child will receive the full principal sum assured along with the earned bonus.

If you want to take out insurance, it is good to go directly to the insurance company's office. Insurance can also be taken through an insurance representative. It should be remembered that any kind of transaction should be done through an account payee cheque. In addition, many companies now offer e-premium facilities. As a result, customers no longer need to go to the office or pay premiums through an insurance representative; instead, they can pay premiums from home through credit or debit cards and bKash. In addition, the premium is also calculated on the website using information such as the term, amount and age of the policyholder. Various companies provide this service.