Quality education isn’t cheap. The annual tuition fee for elementary at a private school in Metro Manila, for example, could set parents back anywhere between P70,000 and P200,000. A year’s tuition for a private high school may cost between P100,000 to P250,000.
The picture isn’t going to get better in the long run; financial experts predict that a decade from now, a four-year college course could cost between P3.5 million to P9.7 million.
What’s a breadwinner with a young family to do?
The only logical answer to this is to plan early, especially if there is more than one child in the family. But how to plan? Savings can only take you so far. Placed in a bank savings account, the cash will barely earn interest, with inflation eroding its value over time.
An educational plan, on the other hand, has the potential to grow remarkable interest upon maturity, and ensures a child’s educational future. Consider the following long-term benefits an educational plan can bring:
When started early, an educational plan saves money.
The best time to take out an educational plan for children is when they are born, because premiums are always lower for younger beneficiaries. Premiums for teens and grown-ups cost more than those for children.
Money invested in an educational plan enjoys long-term growth potential.
The longer investments have time to grow, the larger their potential returns. An educational plan has the capability to grow as an investment with bigger returns than a basic bank savings account.
Imagine the potential for growth, say, if you sign up your six-year-old for AIA Philippines’ Future Scholar; your premiums will have more time to flourish when invested early in Future Scholar’s expertly managed funds. This larger reserve opens more possibilities for your children, its beneficiaries who may be able to attend higher-quality (and higher-cost) schools.
On the other hand, if you can only count on your savings to pay for tuition, your children will be limited to attending a school that falls within your savings range. Taking out a loan may help at first… until the interest on the debt starts adding up.
An educational plan works in spite of inflation.
Because of inflation, tuition for college gets more expensive by 10-15% every year. A good educational plan can help you keep up with the increases through robust returns. Additionally, because today’s educational plans are set up to protect you from economic uncertainty, parents can rest assured that future financial stresses will have little effect on their investment.
A life insurance plan offers educational benefits, too.
A life insurance plan can also take care of your children’s future educational needs. In case illness prevents you from making a living, or if you pass away, the right life insurance plan can offer financial support to fill the gap you leave behind. And the earlier you invest in a plan, the bigger its chance of earning more interest as the plan matures. That way, your children’s educational future can be better assured.
There’s no disputing the benefits offered by educational plans to young families. Guaranteeing a quality education and offering the potential for financial growth are just two parts of the larger upside: protecting children’s educational future in the long run. Given these benefits, it shouldn’t be a question of if parents should secure a plan for their children; rather, it’s a question of when.
AIA Philippines assures clients of financial protection and security for their children’s education. Read about AIA Philippines' many products for more information.