Confused to Choose Savings Or Education Insurance? Know the Difference
Education is currently an important factor to gain access to broad knowledge. However, in Indonesia, the economic conditions and the increase in the cost of education are still one of the challenges that must be faced.
Recently, the Deputy for Distribution and Services Statistics of the Central Statistics Agency (BPS) Steiatnto said that the price index in the education sector experienced high inflation in August 2021, namely 1.2% on a monthly basis.
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| Confused to Choose Savings Or Education Insurance? Know the Difference |
Then on an annual basis, inflation in the education sector was 1.59%, up compared to the position in July 2021 which was 1.52%.
Therefore, careful preparation is needed for the cost of children's education as early as possible. Parents can set up savings or education insurance. What is the difference between this education savings and insurance?
Lifepal.co.id Co-Founder Benny Fajarai revealed that both of them seem the same but there are different benefits that will be obtained.
Benny said that these two instruments have the same goal although they are different. He said that education insurance is a unit-linked product or an insurance product that is accompanied by investment.
Meanwhile, savings and education are term savings with a certain interest and can be withdrawn after several years according to product terms and conditions.
For education savings, the interest given is relatively smaller, around 3.5%. Then the risk level is smaller and is recommended for the short term.
Then some savings products have a combination of savings benefits such as life insurance to overcome the risk of stopping savings due to death.
Furthermore, for education insurance, the results of the collection of funds can be greater because they are invested in various instruments. Then the risk is greater because the insurance investment returns for unattended links are always good.
Education insurance is recommended for the long term because the investment returns are felt after 5 years. "There is life protection that allows the heirs to get cash if the insured dies," he explained.
Benny said that both education savings and educator insurance have their respective risks and advantages. What is certain is that the benefits offered can only be maximized if they are in accordance with their respective goals and financial conditions.
Definition of insurance and savings
Insurance is a financial product that offers protection or economic protection in the event of a risk. Such protection will be provided as a benefit in the form of compensation for financial losses or minimum financial losses. Meanwhile, savings only offer benefits in the form of a means of storing money that is safer against the risk of physical damage.
Purpose of deposit
Deposit insurance funds are usually referred to as premiums. This premium will have to be paid with the aim of getting a guaranteed small loss in the future.
Meanwhile, the deposit of savings funds is used to minimize the risk of damage that will be obtained if stored at home, or aims to keep the allocation of funds from being used for other daily needs. However, with the facilities obtained, of course, every customer needs to pay a monthly administration fee from the money saved.
Fund Status
The ownership status of the funds or premiums you deposit will indeed belong to the insurance company.
Meanwhile, if you deposit your money in a bank as educational savings, the funds will be fully yours and there will be no transfer of ownership to the bank.
Effect of Insurance and Savings on Assets
Saving education savings in the bank will indeed increase ownership assets. Meanwhile, if you save education funds in pure insurance, you can reduce personal assets because you still need funds to pay premiums so that the policy remains active and can be used.
However, you can add assets even though you save education funds in unit link insurance because the benefits you get from the investment instrument you choose are other than the insurance benefits itself.