Education plans should have the following features:-
- Education fund at child's college age -- which allows you to withdraw funds when your child reaches certain ages such as 18 or 21 years old.
- Payor benefit (should either one or both parents die or become incapacitated, the plan runs by itself)
- Insurance Education Plan
- Unit trust
Insurance Education Plan
Insurance education plan's features normally have payor benefits. One significant advantage of such plan is that should the contributor die or be totally and permanently disabled, the future payments due until the plan matures are immediately waived. The beneficiary will receive the benefits as defined in the plan, i.e., the child's education fund is secured no matter what happens.
Another advantage of using insurance education plan is the tax deduction.
Education Planning through Unit Trust
However, if you choose to fund your child education by investing in unit trust, remember to complement it with an equivalent term life plan, so that should the payor die or become incapacitated, the there will still be a fund for your child to continue pursue his or her education dream.The investment portfolio must also be monitored closely and rebalanced every year, so that as the child's age grows closer to his or her tertiary education age, the fund should be rebalanced to more conservative portfolios.