Long before the birth of a child, parents and grandparents wonder how the future of the child will look like. To help them learn a great job or start studying, grandparents often invest money in a savings plan, providing children with insurance for their education. Many parents also think about a training insurance. Whether or not a training insurance is worthwhile, find out here.
Children cost a lot of money
That children cost a lot of money is known, but how much does studying cost, for example? Once the German Studentenwerk has calculated what costs students will have to pay if they decide to study for six semesters with a bachelor’s degree – that’s 60,000 euros.
Anyone who decides to study for a long time, such as medicine or archeology, must dig deeper. These costs can usually not be financed by part-time jobs alone, usually the parents add something to it. All parents, who do not have the financial means to support their children in their studies, like to take out education insurance and hope that the premiums paid over years will be enough to pay for their studies. But is the training insurance really so efficient and worth it for parents to invest in this insurance?
The training insurance as life insurance
Even if the benefits of a training insurance are very attractive at first glance, this insurance is not really new. Strictly speaking, an education insurance is nothing more than a classic endowment life insurance, which is often coupled with the conclusion of a term life insurance. Parents or grandparents who take out training insurance for their children or grandchildren, as in a normal life insurance, pay each month a certain amount, which is then paid at a certain time with interest. In a training insurance, the child is always the beneficiary and can dispose of the money and use it, for example, to finance a study.
When should a training insurance be completed?
Anyone who decides to take out training insurance must, if possible, complete it at the birth of the child. Only when it comes to a very early insurance, then the time is sufficient to save a considerable amount. As with a classic life insurance, a period of 20 to 25 years is realistic for the training insurance, 25 years, however, are the upper limit, otherwise the training insurance will be paid only when the study is already completed. But not all students manage to complete their studies in the regular time, but usually the period of two decades is sufficient as a term for a training insurance.
The term life insurance
Many insurers make the conclusion of a term life insurance mandatory if a training insurance is to be completed. That has a good reason. If something happened to parents as contributors to the training insurance, then the insurance would be virtually extinguished. In the event that the parents should die, applies the term life insurance, the children as survivors then no longer have to worry about further contributions. But there is also the possibility of transferring the training insurance to the godparents or the grandparents and they then continue to pay the insurance if something happens to the parents.
Is a training insurance worthwhile?
According to insurance experts, a training insurance is not such a good idea. They believe that low-return training insurance costs a lot. Anyone looking at the development of interest rates for life insurance in recent years will agree with the experts.
If you are looking for an alternative, you can find it among other things in a home savings contract but also in federal treasury letters, because they can convince with moderately low contributions, but with high returns. All those who wish to invest in training insurance should not forget in this context that the cost of term life insurance, which must be taken out together with the training insurance, is constantly increasing.
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