There are 2 kinds of a participating endowment insurance plans that you can buy to save up for your child.
The first is a limited premium payment type of endowment that matures at ages 17 to 24 where your child needs funds for university education
The second is a limited premium payment type of endowment that matures at age 99 only. It gives you certain flexibility in withdrawing funds.
Let's save you time, here's the 7 best savings plan for your child at a glance.
I'd follow with a deep analysis on each of these plans for you.
Limited premium endowment with a fixed maturity
Yield (Based on monthly premium of $400 and premium paying term of 10 years; removal of all optional riders)
Limited premium endowment with maturity to age 99
AVIVA MyEduPlan Review
Aviva is the second highest total guaranteed IRR compared to the other fixed maturity plans.
We liked that it has more flexibility in payout options that allows you to match the timing of when funds are needed. For example, when entering university via JC route instead of Poly route, it would take a year less.
Most endowment plans can add riders for waiver of premium upon death, total permanent disability, or terminal illness of policyowner.
For Aviva MyEduPlan, there is an additional lump sum payout of 5x annual premiums if the EasyTerm rider is purchased. This seems to be the only plan offering this.
There are 2 kinds of payout ages (19 or 21) to fit either a girl's or boy's possible university years. You will receive 2 Guaranteed Cash Benefits when your child turns 17 and 18 (ANB), then 4 Guaranteed Cash Benefits from chosen payout age.
AXA Early Saver Plus Review
AXA Early Saver Plus offers the "most number of payouts" because you can choose the policy term ranging from 10-25 year.
All cash payouts will be distributed on the last 3 years of the policy term.
This plan also has a unique outpatient benefit of up to $200 per claims. (Reimbursement basis, 2 claims per policy life time).
It pays out for events dreaded like Hand Foot Mouth Disease (HFMD).
And it has only one premium waiver optional rider for CI only. This is the least compared to the other options we are listing here today.
The plan gives out 2 payouts before selected payout age. i.e: if payout age is 18, there will be 2 payouts on age 16 and 17.
Followed by the 4 payouts from age 18, in essence, this plan has 6 guaranteed payouts.
These 2 additional payouts can be used to cover the "starting" cost for tertiary education materials like textbooks and laptops, etc.
Entry age for policy is 0-8 only.
Returns aside, this plan has the strongest premium waiver offerings compared to similar plans from other insurers.
On top of that, this plan has one of the highest death benefit coverage compared to other education endowment plans.
This plan like most education plans can last up to 20 years.
However most plans typically limit their premium payment between 5-15 years.
NTUC Vivochild allows you to pay throughout the term of the policy except the last 2 years. Hence, minimum premium size may be lower.
This plan is also unique to offer hospitalisation cash benefit of $100 per full hospitalisation day if admitted due to HFMD, food poisoning or dengue.
In terms of returns, while it's projected returns are one of the highest, its guaranteed returns is the lowest of the lot.
Tokio Marine Kidstart
The unique features of this plans lies in its options rather than its returns.
For instance, there is a premium waiver that covers the child in event child is diagnosed with autism, leukaemia, and severe asthma.
Upon maturity of plan, your child may take up a new whole life or endowment plans up to the same sum assured. (without medical underwriting)
There is also 150% of sum assured paid out if accidental death unfortunately occurs to the child insured.
There is also a $20,000 for (unborn) sibling cover at no extra charge.
This is the only plan to offer premium waivers for both payer and spouse (whichever occuring first).
While the returns are slightly modest, the many and comprehensive features more than make up for it.
Especially if your spouse were to pass on leading to increased expenses in his/her day to day to cope with the loss.
This plan is typically is being marketed as a long term savings plan as it matures when policy holder is 120 years old.
However, it can be used for education savings as well if you have a 20year period.
As the best time to let your money compound is last year, couples can purchase such plans even before they have kids.
This plan is a comprehensive savings plans that covers a lot of usage as cash can be withdrawn any time (subjected to plan has sufficient and sustainable cash values).
On the returns portion, it is not as strong as it's Aviva's counterparts.
However, it makes up in the plan's longevity (till age 120).
Similarly to Manulife's ReadyBuilder, Aviva MyLifeSavingsPlan is suppose to function similarly, only drawback is that it only lasts till first policyholder's age 99.
This age is important as compounding effects are felt at the end of it, so technically, the longer it lasts, the better.
It makes up for its shortfalls by having one of the highest guaranteed yield at the policy year 20 mark.
The guaranteed yield p.a for AVIVA MyLifeSavingsPlan in 20 years time is 1.55% p.a. as compared to Manulife ReadyBuilder's guaranteed yield of 0.44% over same period of time.
Click on images above to compare in details.
On top of that, Aviva MyLifeSavingsPlan also allows life stage claims. These include change in marital status, purchasing property, becoming parents and child's tertiary education.
This makes for an even more comprehensive savings plan!
Which type of endowment plan is better?
If you have a very specific goal of tertiary education funding in mind and there are other means of savings and investments, purchasing "education" plans are a good idea.
You are not tied up that long compared to having a plan till you are 99 or 120 years old.
Otherwise, getting endowment plans that matures at age 99 is a good solution that catches all.
We have recommendations takes into consideration of factors like returns, features, and riders. If you'd like to find out, contact me below by WhatsApp or email to email@example.com.
Why Get A Savings Plan today!
1) Endowment Plans the best for Time/Age-based milestones vs investments
There are other methods like an investment plan which have higher potential returns. However, investments have risk and can also go south very quickly.
Imagine an economic crisis affecting the stock market on the year your child is entering university! Will you need to sell at a loss then?
Saving for your child is very different from wealth accumulation for other goals like getting a car or retiring.
If times are bad, you can take the bus or delay your retirement for a year or two to ensure your finances are in order before you take the leap.
2) Endowment plans can be freely given to your child unlike using your CPFOA
There is the option for your kids to utilise monies in your CPF Ordinary Account to be paid back by your children in future under the CPF Education Scheme.
However, the monies used will incur accrued interests which is to be borne by your kids when they enter the work force.
#Note: Accrued interest is to replace the interest you would've gain in your CPF account as if the money hadn't been used.
There you have it, 7 plans that we compared for your planning towards education savings.
Life has many variables, which is why after finding out, most of our private clients opt for plans that last till 99 years old as it serves multiple purposes.
Planning for funding your child's education is not a difficult thing. Discuss with an independent financial advisor who can compare plans across various companies to see which suits you the most today!
PS: Join our Facebook group "millionaire kids"
We've infographics (FREE research done for you) like these on future costs like tuition fees!
Last updated on December 2nd, 2019 at 12:08 pm