Characteristics of Student Loans and Student Insurance
Often we equate student loans with insurance education. It is indeed often happens in our daily lives. These two products have the same goal, namely the financing of education. In print media we often read complaints from the community that values student loans they instead often reduced. I did some investigating and discovered that the customer was wrong in choosing. He chose education rather than student loans insurance. Because education unit link insurance is also affected by investment performance, it is very possible savings even less. Both of these products are very similar at first glance, that both are equally offers funding for education, provide insurance protection and investment. Both are very different and have risks and characteristics. So, where are the differences?
Student loans, or as any other savings plans, including into savings deposits which are financial products issued by banks. Therefore, student loans guaranteed by the Deposit Insurance Agency or LPS, which means that if you later case of the bank where you save a bankrupt, the value of your savings are safe. On the other hand, unit-linked insurance product is not a bank and is not guaranteed by LPS. It is a unit-linked insurance product of insurance company. If you find this service at the bank, then the bank merely acts as a sales agent unit link. In principle, the savings is the ideal place to maintain the integrity of the capital. In contrast to unit-linked insurance whose function is to focus on two aspects, namely as a guard at a savings or investment.
Later, student loans is a savings deposit products which typically have a term of 2 years and over. With student loans, you must deposit a sum of money every month on a regular basis until the maturity date. It is different from insurance education. Basically, this product is a combination of savings and term life insurance. The system works is to collect funds from customers and take advantage of the savings balance as collateral for the education of students. For example, upon entering elementary school, junior high school or college, the insurance company will issue a sum of money taken out of your own savings balances to finance the educational purposes. And if the old man dies, the savings is automatically deposited and education expenses can still be guaranteed.
If you save money in a savings or student loans plans, the level of benefit or interest that you earn necessarily compatible with the provisions according to the agreement. So, by saving money on education or savings plan, you will earn interest income that has been set and your savings will not likely be reduced. Instead, return or profit rate that you get on unit-linked insurance education is not defined or is not fixed. It is influenced by the performance of the investment and the risk of the investment itself. For example, if you choose stock mutual funds as an investment instrument, the rise and fall of stock prices and capital market conditions will greatly influence the fluctuations in the value of investment funds in unit-linked insurance. Therefore, the return that you get from unit-linked insurance can be low, remain, or even increase. There are other advantages offered by the unit-linked insurance. It is their chance to double the savings. Therefore, if you are aggressive in investing, then there is no harm in also choose unit-linked insurance education as vehicle collateral for the education of children.
Indeed, preparing education fund is not easy. However, it would be better if you prepare as early as possible. So far if you already have student loans, the question is what investment vehicle that you use, the right time period or not, and so forth. In time, the success of your plan in setting up education funds greatly depends on the strategy that you do early. Therefore, it is necessary to use the services of highly recommended financial planners. Before you drop a second choice among financial products, it helps you to know the profile of the product. For example, savings and insurance products have features that are very different in terms of protection and reciprocity. The value of the insurance protection or student loans plans generally under link unit. It happens because if you follow the student loans, you will automatically be exempt from the cost of premiums. The premium is paid by the banks, so the amount of coverage is also limited. Meanwhile, the level of protection offered by the unit links tends to be higher because you also have to pay a premium.
If you are still free to choose a financial product that is appropriate to your financial goals, whether to choose savings or insurance, then a brief description of the profile of both products can be the following. Student loan is suitable for short-term savings education fund, which is generally 2 to 5 years. In savings products, then there is great interest, but only the administration fee. In savings products, there is a combination of insurance benefits, namely life insurance only, and it does not include health insurance. In this case, if the insured dies, the heirs receive funds amounting to nominal those stated in the contract, as well as protect against the risk of death resulting in the cessation of routine deposit savings that can be anticipated.