[Children’s Education Fund 2026] Prepare for overseas study, with an overseas study cost table

When children go overseas to study, it not only broadens their horizons, but also widens their perspective. That said, it is well known that overseas education is expensive. If you can start preparing an education fund for the next generation early, you can ease future financial pressure. There are many tools available on the market for saving towards future overseas study expenses. Generally speaking, the earlier you take out a policy, the longer the accumulation period and the higher the return. But how much does it actually cost to study abroad? How much are the expenses for overseas study? When should you start preparing an education fund? How much should you save before it is enough? This time, we will explain each of these points one by one. 

If you want your children to study abroad, the first task when setting up an education fund is to establish a savings target, and understanding the cost of overseas study is a crucial step. Readers may first refer to Table 1. Some organisations have surveyed the education expenses for studying overseas. Popular destinations for Hong Kong students, such as the United States, Australia, Canada and the United Kingdom, are all relatively expensive. Taking the United States as an example, the total annual education-related cost per student is US$35,097 (approximately HK$274,000). Over a four-year undergraduate course in the US, the total cost amounts to US$140,388 (approximately HK$1.095 million). When accommodation and meals locally are added, this is also a considerable sum. Therefore, if parents want to send their children to study abroad, they may need to prepare their finances well in advance.   

The earlier parents start saving, the more they can not only build a habit, but also let their assets compound and grow in value. According to the Rule of 72, dividing 72 by the annual rate of return gives an estimate of how long it will take for the principal to double. For example, a product with an annual return of 7.2% would take 10 years for the principal to increase by 100%, whereas a product with an annual return of 6% would take 12 years.

There are many tools available for building an education fund for the next generation. Table 2 compares five common financial tools, including education fund insurance, guaranteed income savings life insurance (Coupon Plan), long-term savings insurance, investment-linked life insurance plans (investment-linked insurance, ILAS), and monthly stock investment plans. When planning an education fund, many people focus on guaranteed returns. However, among the five products, only education fund insurance, guaranteed income savings life insurance (Coupon Plan), and long-term savings insurance offer guaranteed returns, and unless the policy is surrendered early, they generally do not lose the principal, making them more suitable for those with a lower risk tolerance.

As for investors seeking higher returns, investment-linked insurance or monthly stock investment plans may be considered. However, higher returns come with higher risk; if investments perform poorly, it may not be worth the while and could end with a loss of capital.

Of course, parents need not put all their eggs in one basket; they may consider adopting a mixed strategy to diversify risk.  

Long-term savings insurance not only preserves capital, but also offers guaranteed returns, so it is a popular choice among many parents. However, it should be noted that long-term savings insurance products vary considerably in nature: some place greater emphasis on guaranteed returns, while others focus on non-guaranteed returns. Users may choose suitable products according to their risk tolerance and financial planning needs.

Taking Mr Chan, aged 35, as an example, he plans ahead to set up an education fund for his newborn daughter and chooses long-term savings insurance as a savings tool. As shown in Table 3, Mr Chan contributes a total of HK$120,000 per year for a 10-year premium payment period, making a total contribution of HK$1.2 million. In policy year 18 (highlighted in red in Table 3), the policy’s total cash value is HK$2.04 million, equivalent to 170% of the total premiums paid.

However, it must be noted that if the policyholder surrenders the policy early due to an unforeseen need, the surrender value may be lower than the premiums paid. Therefore, before purchasing a policy, it is advisable to pay attention to your own financial reserves to avoid being forced into an early policy lapse.

Table 3: Example of Long-term Savings Insurance Returns (HK$)

Assuming the insured is a 35-year-old non-smoking male, with total annual premiums of HK$120,000 and a 10-year premium payment period

In summary, the earlier an education fund is arranged, the better. However, there are many financial tools to choose from, and they involve a fair amount of specialised knowledge. If you would like to know more, please feel free to call or WhatsApp 37051599 to enquire with our 10Life insurance advisers.

Note: Information is current as of 1 January 2025.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.