INSURANCE: New life policies cover your child's education costs

Thus it is no surprise to see that up to 65 per cent of Thai parents face financial problems at the opening of each semester.

According to Millea Life Insurance (Thailand), the average spending on education for kindergarten, primary school, secondary school and university is Bt138,000, Bt168,000, Bt187,000 and Bt264,000 respectively.

Insurers see this as an opportunity to sell insurance policies covering educational spending. Under an educational insurance policy, insurers provide payments to offspring when policyholders, usually parents, pass away.

They also usually provide regular payments to policyholders like many savings-plan policies if the policyholder does not pass away.

American International Assurance offers Endowment Plan 445, Bangkok Life Assurance Education Plan 14/10, Education Plan 18/14, and Education Plan 20/16, and Ayudhya Allianz CP Life Ayudhya Secure Future 20/20.

Muang Thai Life Assurance offers Education Life 1 and Education Life 2, while ING Life offers Education Fund at 18 and Bachelor Degree Education Fund 18/5.

Millea Life Insurance (Thailand) has introduced an Education Protection Plan. The company claims that the uniqueness of its policy is to offer an assured sum not only to children but also to policyholder parents as well.

Under this insurance policy, the company will pay policy holders for spending needed in each period of education, offering up to 175-205 per cent of the insured sum depending on the offspring's age at the first year of the policy.

For example, if a child is one month to four years old at the first year of the policy, the highest payment will be 205 per cent. If child is five to 10 years old, the highest payment will be 195 per cent. The payment will be 175 per cent at 11-12 years of age.

Policyholders will be required to pay premiums until the child turns 17 but coverage will expand until he or she is 21.

Children eligible to buy this policy range from one month to 12 years old, while the policyholder must be 20-55 years of age. The minimum sum insured must be at least Bt100,000.

The payment is divided into two categories.

First, should child and parent not pass away, the total payment will reach 175-205 per cent of the sum insured.

The payment includes 10 per cent of the sum insured when the child is five, 20 per cent at age 11, 25 per cent at 14, and 30 per cent at 17, 18, 19 and 20.

When the policy expires at age 21, the company will pay another 30 per cent of the sum insured.

Second, if the policyholder dies, the child receives 150 per cent of the sum insured with coverage till the age of 17. In addition, he or she will also receive payment in each period similar to the first case until the age of 21.

If the child dies, the policyholder will receive 150 per cent of the sum insured.

For instance: a 35-year-old mother buys a policy with a sum insured of Bt500,000 for her son when he is three years old. If the mother or son passes away, the payment will be 150 per cent or Bt750,000. If the mother dies, her son will also receive an additional payment in each period until he turns 21.

The premium that the mother needs to pay per year is Bt69,471 until her son turns 17. Thus she will have to pay the premium for 14 years.

If neither dies, the company will pay up to Bt1.025 million until the policy expires as a combination of payments when the son is 5, 11, 14, 17, 18, 19, 20 and 21.

This educational insurance policy is sold only at BankThai's 112 branches nationwide.

Finance Reporters

The Nation