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Securing Your Child's Education Fund: A Mother's Dilemma in Choosing the Right Insurance
Securing Your Child's Education Fund: A Mother's Dilemma in Choosing the Right Insurance
Grace, a caring new mother to her daughter Abigail, sought to secure her child's future through careful financial planning. Faced with a multitude of options, from unit trusts to insurance savings plans, she felt overwhelmed. In her frustration, she turned to Frank the purpose-driven insurance advisor.
After thorough fact-finding, he helped Grace prioritise her goals based on her budget and risk tolerance. She chose a conservative insurance plan and allocated funds to SSPN for tax relief. However, the lingering concern was what would happen if Grace passed away, leaving Abigail without financial support for living expenses and education up to Abigail's 25th birthday, which required RM 500,000.
Here's how Frank addressed the issue:
Risk Tolerance: Low
Allocated Budget: RM 500 per month
Budget Breakdown:
1. Insurance Saving Plan:
- Monthly Contribution: RM 200
- Commitment: Engage in a 20-year savings plan with a guaranteed annual return.
2. SSPN (National Education Savings Scheme):
- Monthly Contribution: RM 50
- Flexibility: Can be stopped at any time without incurring penalties.
- Tax Benefits: Enjoy tax relief benefits.
3. Life Insurance Coverage of RM 500,000:
- Monthly Premium: RM 250
- Coverage: Protects against death for a 20-year term.
Hindsight:
When planning for your children's education funds, it's important to consider more than just wealth-building financial tools. Life insurance can also safeguard their future. Keep in mind that there's no one-size-fits-all approach to wealth accumulation; understanding your risk tolerance is crucial. If you're a seasonal investor, you might allocate a greater portion of your portfolio to high-risk, high-return instruments like the stock market.
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