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TODAY MONDAY 6 JANUARY 2014

EVERYONE CAN BE FINANCIALLY SAVVY

Start saving now to protect your childs future


FROM POSB EXPERT BRANDON LAM Head of Consumer Investment and Insurance Products

How much are you saving for your childs education?


11% 21%

WHY SHOULD I CONSIDER AN EDUCATION SAVINGS PLAN?

A good education savings plan can help you grow your funds with a regular rate of return, allowing you to have sufficient funds when it is time for your child to attend university. This is especially critical in light of rising fees at tertiary institutions here and abroad. For example, a fouryear Business course at the National University of Singapore could cost you more than S$35,000. And according to a survey conducted by insurance company Aviva in 2012, one in four Singaporean parents surveyed is not saving enough for his childs university education.

44% S$500
45%
<S$100 S$100 - S$499

are saving more than monthly for their childrens education.


S$500 - S$999 S$1,000 and above

CHARACTERISTICS OF A DESIRABLE EDUCATION SAVINGS PLAN

23%

SOURCE: AVIVAS CONSUMER ATTITUDE TO SAVING FOR CHILD EDUCATION, NOV 2012

WHAT ARE THE SAVINGS BENEFITS OF POSB MYEDUPLAN?

POSB MyEduPlan, a life insurance endowment plan, is one of the most flexible policies and has one of the widest age ranges in the market. It offers xed returns of up to 1.41 per cent per annum upon maturity and you

get a maturity benet at the end of the policy term. POSB MyEduPlan offers Fixed Cash Benets payouts that are aligned to your childs educational milestones. There are up to six such payouts, with a main payout at 19 or 21 (age next birthday). It is designed so that the larger payouts will kick in just when you need them most.

A good education savings plan can help you grow your funds with a regular rate of return, allowing you to have sufficient funds when it is time for your child to attend university.
Brandon Lam
HEAD OF CONSUMER INVESTMENT AND INSURANCE PRODUCTS

It matches your affordability level, risk prole and savings horizon. It ensures that your saving goals can be met under unforeseen circumstances.

WHAT ARE THE PROTECTION BENEFITS OF POSB MYEDUPLAN?

POSB MyEduPlan protects you and your child from unforeseen circumstances. Apart from death and terminal illness insurance for your child, the addition of certain riders will result in future premiums being waived in the case of death, terminal illness or permanent disability of the policy owner.

Give your child the gift of education


Plan for your childs education early to meet rising university costs
The importance of education in lifting ones earning power and standard of living is undeniable. For parents, being able to give their children the best education possible is one of the greatest gifts they could give them. However, rising tuition and living fees, coupled with intense competition to get into the best universities, mean that a quality tertiary education does not come cheap, especially if you plan to send your child abroad to study. To safeguard your childs future, it is important that you plan your finances early so that you have sufficient funds in place, especially in light of rising fees across tertiary institutions in Singapore. The increase in fees also extends to overseas degrees taken locally. At the National University of Singapore, fees for a degree in Business have increased 6 per cent to just under S$9,000 per annum for Singaporean students, while those for Medicine have risen by a similar rate to over S$23,000 per annum. Do the math and youll nd that a four-year degree in a local university is going to cost you a tidy sum. And if your child decides to take a degree course at an overseas university, you can expect the costs to be even more unpalatable. So, what can you do to prepare yourself financially so that your childs education is not compromised? Start your planning by estimating the cost of your childs tertiary

How MyEduPlan Works


Mr and Mrs Tan have a son, Ben, whos turning one. They wish to save at least S$50,000 for his university education and related expenses.

HOW TO PLAN FOR YOUR CHILDS EDUCATION


Estimate the cost of your childs tertiary education Take into account not just the tuition fees, but other expenses like living allowances, costs of study materials and dormitory rates.
Year 4

University
Year 1 Year 2 Year 3

JC Bens Age (Age Next Birthday) 1 year 17 18 21 22 23 24

S$2,500

S$2,500

S$20,000

S$10,000

S$10,000 S$10,000 Fixed Cash Benets

Mr Tan pays S$4,451 per year for 10 years. The total premiums paid are S$44,510.

Total Fixed Cash Benets = S$55,000 Total projected bonuses at maturity = S$26,719 Total policy benets = S$81,719

Find out the current costs of these items, then factor in the estimated rate of ination to determine these costs by the time your child is ready to attend a tertiary institute. Calculate the amount of funds you will have Work out the future value of your savings, life insurance policies and other investments by the time your child turns 18 or 21. To do this, you need to forecast the rates of return and any additional funds you intend to save. Work out the shortfall, if any, between the estimated cost for your childs education and how much you expect to have by the time your child is ready for a tertiary education. Choose a nancial product that meets your risk prole Before deciding on which product to put your money in, you should decide on your goals, the amount you are prepared to set aside, the required rate of return, and the amount of risk you are prepared to take. The most suitable nancial product is the one that best meets your criteria.

The above illustration is based on a MyEduPlan policy where Mr Tan male, 35 (age next birthday), non-smoker has chosen to pay an annual premium of S$4,451. This translates into total premiums of S$44,510 paid over 10 years, including premiums of EasyPayer Premium Waiver (compulsory). The total policy benets of S$81,719 consists of Fixed Cash Benets of S$55,000 and total projected bonuses at maturity of S$26,719 at 4.75% projected investment return. Total projected bonuses at maturity are non-guaranteed. Numbers have been rounded up to the nearest dollar value.

MyEduPlan provides you with cash benets aligned to your childs education expenses. ILLUSTRATION: ONG ZE TENG

education and the funds you will have by the time he starts attending university. Then, seek a suitable financial product that meets your goals (see sidebar). Placing your money in a basic savings account will not be sufficient. It is important to choose a comprehensive education savings and protection plan with stable projected returns so that you can slowly and safely grow your funds. A life insurance endowment plan is one product that meets these criteria.

MyEduPlan, for instance, is designed to provide you with cash benets that are aligned to your childs university education expenses. It also protects you and your child from unexpected events, giving you further peace of mind. The cost of attending university is becoming increasingly more onerous. To be prepared financially, start planning now.
This is the 11th story in a 19-part collaboration between TODAY and POSB.

Rising tuition and living fees, coupled with intense competition to get into the best universities, mean that a quality tertiary education does not come cheap.