Know the 8 Risks of Undisclosed Child Education Insurance – Education insurance today is starting to be taken away by some Indonesians in addition to education savings. The consideration of taking funds for the preparation of children’s education in the future is the additional benefit of protection in case of risks in the future.
The increasing number of education insurance users is inseparable from the phenomenon of increasingly expensive education costs, especially the trend of education costs increasing every year.
Before deciding to take out education insurance, parents should know and understand in advance about these risks in order to take anticipatory steps. Risk is the other side of the benefits of an insurance product.
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Know the 8 Risks of Undisclosed Child Education Insurance
There are at least 8 risks that agents rarely disclose related to the following education insurance.
1. Children’s Education Insurance is not the same as Saving
If you put money in insurance, then the company will invest it in investment instruments that have risks, such as stocks, bonds, and others.
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If the investment made by the company goes well, then buying education insurance can be the right step for you to run, but if the investment made by the company suffers a loss, it could be that the money deposited by parents will be reduced or even exhausted.
2. Since the main business is insurance then there are many discounts for this product
Deposited funds will be deducted for a wide variety of fees and commissions. The greatest cuts occur in the first 5 years. Because the value of the deduction is too large, it may be that the funds left for investment are small.
So for parents who want to save their funds for education insurance, they must be prepared that the funds deposited in the first 5 years will be very small in amount.
3. Premium Payment Is Longer Than The Promise Given By The Selling Agent Of The Product
Actually, the length of the payment period depends on the profit or not of the investment made by the company.
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If the return on investment returns is in line with expectations, then the payment period may be shortened, but if the investment results are not appropriate, then parents will have to pay longer.
Unfortunately, many agents promise that the payment period can be shorter, without notifying of this risk.
4. Because the premium money is divided into investments, the Sum Insured becomes relatively small
Education insurance does provide a sum insured if the parents die. But many do not pay attention to the amount of sum insured that the child will receive later.
Instead, the focus lies on the value of the investment that can be achieved. By only focusing on investment returns, life insurance protection money becomes minimal, so there is a risk that the amount is very minimal or far from enough for the continuation of children’s education costs.
5. Choosing the Wrong Investment Instrument makes the realization of investment results far below the initial illustration
In education insurance, the money deposited will be invested in this type of investment to pursue the target education fund.
Unfortunately, agents often choose the type of investment that has a high return, usually stocks that unfortunately this type of investment also have a high risk as well. Mistakes in the selection of the type of investment will lead to failure in achieving the target education fund.
6. Parents Don’t Read the Policy Carefully
The content of the insurance policy becomes the legal basis of any action related to insurance, therefore parents who want to put education funds for their children in education insurance, should read and understand all the contents of the policy.
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If you are not careful, it could be that parents will get a risk in the form of less than optimal results from the insurance benefits.
7. Projection Not Achieved due to bombastic offers at the beginning of the promotion
Usually the first thing an agent asks parents about education insurance is a projection of the value of money to be received and generally the agent will show a projection figure that looks good and optimistic.
Unfortunately, many prospective customers (parents) automatically believe in the projections given by the agent, even though these projections are not necessarily realized.
8. Stuck participating in additional benefits (Rider) that make investment returns not optimal
Agents will usually also offer riders or additional insurance to prospective customers. Some of the benefits of this additional insurance include protection of permanent defects, health and for other protection.
Well, what needs to be noted is that agents often do not inform and do not explain that taking a rider is equivalent to reducing the investment ration for children’s education funds.
So the target education fund often becomes missed or lower due to taking out additional insurance.
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