Many parents desire to ensure their children’s future, which is why I receive numerous requests for guidance on setting up an educational fund for them. Build an Educational Fund for Your Kids the Wise Way Although Sun Maxilink Prime can also be utilized to establish the fund, Sun Maxilink Bright appears to be more suitable for this objective. I will elaborate on this in the later section of this article.
Educational Plan vs. Educational Fund
An educational plan is a type of investment that provides a guaranteed payout once your child reaches a certain age, usually 17 years old (as in the case of CAP). In contrast, an educational fund is created by regularly investing in stocks, UITF, mutual funds, or VUL, with the goal of accumulating enough funds to cover your child’s college expenses.
When to Start Building the Educational Fund?
“When is the ideal time to start building an educational fund?” This may be your first question. The best time to start building this type of fund is actually as soon as your child is born. This will provide you with enough time to save up a sufficient amount of money to finance your child’s education.
You may be wondering, why is it necessary to start so early. After all, your child won’t be going to college for a long time, right?
You might be surprised to learn that starting early is actually beneficial, as it gives you more time to build up the fund. However, this doesn’t mean that you can’t start later when your child is already 5 years old, for example. Just be prepared to set aside more money for it.
Assuming the plan was made in 2018, and in 18 years, 2036, the child will enter college. Figures are derived from 2016 with an annual increase of 6.9%.
Steps in Building an Educational Fund
Pick a School Where you want to Enroll Your Kids
The first step is to decide on a preferred college for your children. Based on my observations, many parents choose their alma mater as the primary option, but this can still change over time. This decision serves as a reference point for future cost computations, as children are unable to make this decision themselves at a young age.
Personally, I hope my future children will attend UP due to its high-quality education at a lower cost than other schools. With UP as the chosen institution and assuming a four-year course, my cost computations will be based on this preference (and yes, I am assuming a son for this example!).
Calculate the Cost of Education
If you’re lucky enough to start building the plan when your cute baby was born, then probably he will be in college after 18 years.
Looking at the table above, my son will turn 18 years old in 2036 and will enter college in the same year. Due to the surprising cost of education, we must account for a yearly increase in tuition fees at the rate of 6.96% (based on the CHED-approved tuition fee rate hike for the school year 2017-2018 ).
If the cost of education in UP in 2016 is Php 50,000, then in 2018, it will be Php 57,138, considering an annual increase of 6.9%. The following is the computed tuition fee I need to pay from 2036 to 2039:
First Year: Php 189,900
Second Year: Php 203,003
Third Year: Php 217,010
Fourth Year: Php 231,984
The total cost of a 4-Years Course is Php841,897
Add Other Expenses
In addition to the cost of tuition fees, we need to consider other expenses such as allowances, books, field trips, seminars, and other related costs. For the sake of simplicity in our calculations, I will not include these additional expenses. However, if you wish, you can add them to your own calculations.
Since we have made approximations in our values, we cannot provide an exact figure for the total cost. It is common for people to not know the exact amount they will spend on these expenses, so please understand if I do not include them in my calculation.
Set Your Target Fund Value
Once you have included the cost of tuition and other expenses, you will arrive at a specific amount that will act as your goal fund. This is the amount that you need to have before your child starts attending college.
For instance, in my situation, I require Php841,897 to ensure that I can support my son’s four-year program at UP.
Find an Investment Product Suitable for Your Needs
To complete the process, you need to identify a financial product that meets your requirements. There are several investment products available, including the stock market, mutual funds, UITFs, VUL, and more.
Personally, I have chosen VUL as my preferred option to build the fund I need for my son’s education. Additionally, it provides financial security and peace of mind for my family through Sun Maxilink Bright.
Life Insurance to Ensure Your Kids’ Future
Some of you may believe that life insurance is no longer necessary, but that is not true. Life insurance acts as a safety net for building a fund and provides peace of mind that your children can still attend college no matter what happens to them.
Consider the scenario where you become totally and permanently disabled while building the fund. Do you think you would still be able to contribute to the fund? No work means no pay, and you would not be able to complete the fund, resulting in an insufficient amount when it’s time for your children to enter college.
You wouldn’t want your children to blame you for being unprepared, right? They love you unconditionally, and you should love them the same way. Life insurance is a testament to that love.
That’s why I recommend VUL or Variable Unit-Linked plan as a financial vehicle, particularly for parents who lack adequate income protection. It can help families build an education fund for their children securely and efficiently through Sun Maxilink Bright.
What is Sun Maxilink Bright?
“Sun Maxilink Bright is a life insurance policy that also functions as an investment plan. By paying into it for a period of five years, you can secure your financial future and increase your savings. This type of plan can be especially useful if you’re looking to build up funds for education expenses, or to reach other financial goals like buying a car, a house, or starting your own business.”
Eligibility: 18-65 years old
Minimum Insurance Coverage: Php 400,000
Mode of Payment: Yearly | Semi-Annually | Quarterly
Benefits of Sun Maxilink Bright
Can you still recall my target fund if I have to send my child (imaginary for now hehe) in 2036? My target fund is Php841,897.
I’ll show you a sample quotation of Sun Maxilink Bright for myself, age 25, male, non-smoker, invested in an index fund with a historical return of 10% p.a.
Annual Premium: Php 42,000
Semi-annual: Php 21,000
Quarterly: Php 10,500
Daily: Php 117 (the price of your favorite fast food meal)
Total Investment: Php 210,000
Life Insurance Benefits:
- The author’s family will receive a lump sum of Php 400,000 when the author dies, specifically for the education of their son.
- The family can invest this lump sum in a mutual fund until the son is ready for college.
- The author added a rider to their insurance plan called a waiver of premiums or TDB, which means that if they become totally and permanently disabled during the paying period, Sun Life will pay the premiums on their behalf until the 5th year.
- The cost of this rider is Php572 per year, and the author considers it a must-have in any insurance policy.
- The author also has an Accidental Death Benefit or ADB, which is an additional life coverage worth Php 200,000.
If the author dies due to an accident, their family will receive a total of Php 600,000, which includes the guaranteed amount plus the fund value of their investments (which is not guaranteed as market performance is unpredictable).
Grow Your Funds Over Time
Creating an education fund for your children now can help alleviate financial stress when they enter college and provide you with confidence that you can offer them a promising future through proper financial planning.
5 years: Php233,911
10 years: Php374,019
15 years: Php600,881
18 years (2036): Php792,055
Certainly, I have nearly achieved my desired fund value with the help of time. My overall investment amounted to only Php210,000, which means I was able to send my son to a 4-year course at UP with just Php3,500 per month.
Have you considered building an educational fund for your children? Starting as early as possible can pave the way for a brighter future for your kids. Sun Maxilink Bright can help you with this endeavor.
Request FREE Sun Maxilink Bright Proposal
Secure your children’s future with Sun Maxilink Bright. Some of the terms involved may be too technical for you to comprehend without the assistance of a Licensed Financial Advisor. I suggest scheduling a personal meeting, but there’s no pressure to make any commitmentsor purchases. It’s okay if you decide it’s not for you