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Saving for your children’s education? Consider an Endowment

Welcome back, I really hope my last three columns on retirement planning made some impact and you all are seriously focusing on it.

Today we will chat about funding for education. This is a huge area with which most parents struggle.

Having children today is not like long ago; today’s kids are very technologically inclined and support from their parents are key to their success. As the late Prime Minister Dr Eric Williams said, “the future of our nation lies in our children’s school bag”. So where do we start and how do we fund these further studies?

Let’s look first at family work history. It is usually a family practice but not the norm that children follow their parents’ pattern of employment: doctors, lawyers, accountants, nursing, teachers and engineers, just to mention a few.

While these careers are always a parent’s dream, they do come with some staggering cost. How prepared are you?

Over the years, the State has offered various funding programmes which eased the financial burden on parents. However, we have seen that these programmes don’t last forever, as funding then becomes an issue. The most recent was the GATE programme.

Your focus here is to decide as early as possible (I know it could be difficult) as to what career your child or children may desire.

Let’s look at some common careers and cost. The cost today would not be the same 15 to 18 years from now, so we need to look at the inflation factor. Using the standard financial table as a guide, these are the startling facts. The following is based on institutions in the United States and recently updated figures for the period 2019–2020.

Law: This programme can be completed at our local or Caribbean universities, but some parents may decide to have this done abroad. Based on my research, the current average cost per academic year is about TT $300,000  and with the inflation factors, this same programme could cost $512,000 in 18 years’ time, per academic year.

Medicine: Again this can be completed at St Georges University in Grenada. However, I maintained the US universities for ease of understanding the impact of not preparing now. This programme is currently costed at TT$428,000 per academic year. In 18 years, it would cost you just over $700,000.

Engineering: Currently this programme runs at about TT $385,000 per academic year. In 18 years’, time it could be TT $660,000.

These future projected costs were based on 3 per cent inflation factors.

So how do we fund these future costs of our children’s education? One of the simplest and safest ways of doing so is through an Endowment policy.

So, what is an Endowment policy you may ask? Not all insurance companies offer this type of investment, but I can certainly arrange this for you through my company.

An Endowment policy gives you the best of two worlds. It first gives you the peace of mind that your educational dreams for your children are preserved in the event of your untimely passing.

Simply put, if you die before your child attains the desired age, the sum assured can be paid into a fixed deposit account for the benefit of the child. If you don’t die and your child attains the desired age, then your savings would equal the sum assured and be paid to you to send your child to university.

While this type of policy is expensive, it guarantees you the amount you need for the future. The burden of investment risk is transferred to the insurance company thereby giving you the peace of mind that your child or children’s future education is secured.

Always remember, ‘A dream written down with a date becomes your GOAL. A goal broken down into steps becomes a PLAN. A plan backed by ACTION makes your dreams come true.’

While it will be difficult for many to financially support their children’s education, your moral and parental support is just as important. Speak with your children, work with them, support them in their endeavours and always remember that the world is made up of many talented, skilful people that never attended university. Many persons start at one level and educated themselves as they worked.

So, until we meet again….”Give your burdens to the Lord, and he will take care of you” Ps 55:22.


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