Educational fund
Educational fund is one of a few parts included in life insurance policy. Insurance company agrees to pay specified amount of educational fund and other benefits as a supply for child education once parent, who was responsible for earning money for family, dies. This conrtact provide a possibility to fair knowledge gain and continuous education for family's breadwinner child[1][2].
Life insurance ideology
Educational fund is all based on life insurance policy, which can be both term life insurance or permanent life insurance. Life insurance is a method to coverage family's basic expenses in writing contract with a specific insurance company. Insured person agrees to pay some premium amounts over time to provide special benefits in case that insured may passed away. It is necessary to choose specific and named beneficiary, who would get that money in terms of life insurance policy by realising the will of insured[3][4].
Basic ideology is of educational fund is to provide enough money, named as an educational fund, to cover all of expenses that must be covered to give window of opportunity to continue process of getting knowledge and education on college. This amount of money is tax-free in terms of life insurance policy[5]. There can be some additional points in contract, which may be defined as exclusionary conditions and it causes that providing money can be prevented. These may be statuated for example as:
- The specific cause of death (suicide, war),
- Death of insured occurs within specific time (within two years since policy have been contracted).
But in case all necessary points are covered, beneficiary is able to get money or even borrow a money from insurance company without paying taxes[6][7].
Footnotes
| Educational fund — recommended articles |
| Guaranteed renewable — Subrogation waiver — Waiver of premium rider — Absolute assignment — Ex Gratia Payment — Period of indemnity — Short rate cancellation — Indemnity bond — Collateral assignment |
References
- Beck, T., & Webb, I. (2003). Economic, demographic, and institutional determinants of life insurance consumption across countries. . "The World Bank Economic Review", 17(1), 51-88.
- Bernheim, B. D. (1991). How strong are bequest motives? Evidence based on estimates of the demand for life insurance and annuities. "Journal of political Economy", 99(5), 899-927.
- Clauss-Ehlers, C. S., & Wibrowski, C. R. (2007). Building educational resilience and social support: The effects of the educational opportunity fund program among first-and second-generation college students. . "Journal of College Student Development", 48(5), 574-584.
- Cummins, J. D., Tennyson, S., & Weiss, M. A. (1999). Consolidation and efficiency in the US life insurance industry. . "Journal of banking & Finance", 23(2-4), 325-357.
- Patterson, E. W. (1919). Delivery of a Life-Insurance Policy. "Harv. L. Rev.", 33, 198.
- Richard, S. F. (1975). Optimal consumption, portfolio and life insurance rules for an uncertain lived individual in a continuous time model. . "Journal of Financial Economics", 2(2), 187-203.
- Worth, M. J. (Ed.). (2002). New strategies for educational fund raising, Greenwood Publishing Group, Westport, 3-6.
Author: Krystian Prorok
