The cost of education for children is certainly high. The government has prepared a free school program, but not all schools have participated in the program. As a parent, you need to have a plan to prepare your children's education funds later. There are two alternatives to prepare these funds, namely, education insurance and educational savings. Both are investment products for children's education, but they have differences.
Just like other savings, educational savings also have interest. Interest generated from educational savings is usually smaller than ordinary savings. You are recommended by the bank to save funds in the short term (2-5 years), which yields around 3-6% interest. Educational savings have administrative fees that you must pay. It is also equipped with insurance, but the dependents provided are small. If you die, the heirs only get funds worth the savings target when it is due. For example, you plan to take an educational savings account for 5 years, but you died in the third year, your heirs will get a fund worth of savings for 5 years. The interesting thing about educational savings is that the risks are minimal, and the process is easy.
Unlike the case of education insurance, the funds you get can be bigger because the funds you pay will be processed for investment, like mutual funds and stocks. If you die, the heirs get the responsibility plus the investment return. The insurance fund obtained is in accordance with the amount stated in the policy. For example, in the policy, the written down payment is IDR 100,000,000, if you join the insurance program for 10 years and died in the 5th year, your heirs will get IDR 100,000,000 plus investment returns. Education insurance should be done in the long run because the results of new investments are seen in the 5th year. Education insurance is less attractive because of acquisition funds and the risk is big.
If you choose education insurance, you should start before your child enters school. Disbursement of funds will be done in stages from when your child enters elementary, middle school, until college. Unlike educational savings, education insurance is not affected by inflation. You can make a simulation of calculating your child's educational needs such as tuition fees, books, transportation, and extracurricular activities. Then, you can compare the costs of paying for insurance. If you are already involved in education insurance and it turns out that the funds from the insurance are lacking, you can cover it up by enrolling your child in school for free.
If you want to take part in education insurance, look for an insurance company that has a lot of experience, established and conveys a clear information.