What do you look for in an education plan?

I’ve listened to some plans and even read about those offered by the government. All education plans come with tax exemption of up to RM3,000 and that’s a very attractive feature for me. It’s not as if I’m spending money in order to get the exemption, I’m in fact saving money for the future and yet get tax deductions.

What else do I look for? Good returns, obviously. However, education plans are very conversative plans so the risks taken by any insurance companies on such policies will never be high. Generally, low risk investment tools are not expected to generate handsome returns. But I would expect returns higher than the current fixed deposit rate.

Other features that are important in an education plan is that there is coverage for the payor(s) of the plan. This means that in the event that something should befall the payor, be it some critical condition or death, the policy will be completely borned to completion by the insurance company. Of course no one wishes for this, but it is a good “just in case” feature. At least I know no matter what happens, the child is still taken care of in terms of having sufficient education funds.

I also prefer longer term plans compared to those where the payor pays for 10 years and are eligible to withdraw funds via yearly income or lump sum payment at maturity. In my opinion, this defeats the purpose of an education plan. I also chose a higher premium policy than the generic education plan because I felt that the sum at maturity for the generic plan wasn’t sufficient.

I’m happy to have had the policy tweaked to my preference. At least I feel that everything is in order and one of my role as a parent has been fulfilled. How about you, what do you look for in an education plan for your children?