(Last updated: September 2026)
Education insurance is a life insurance or family takaful plan that builds a fund for your child’s education. You pay premiums for many years, and the plan pays out as one lump sum or in instalments when your child reaches the ages set in the plan. If you die or become disabled before then, an add-on called a payor rider lets the plan keep running without any more premiums.
It’s a long commitment, and stopping early can leave you with less than you paid in. SSPN and bank savings can also build a university fund, but they come with different costs and rules.
RinggitPlus checks the tax details against the Income Tax Act, LHDN’s public rulings, and the Ministry of Finance. We also check PIDM, SSPN, and EPF details against each body's official pages, and plan features against insurer and takaful operator documents.
Who Is Covered, Who Pays, And When The Plan Pays Out
The policy owner buys the plan and pays the premiums, while the child is the life insured. If the plan has a payor rider, the payor is the person it covers, which can be the same parent who owns the policy.
In a takaful plan, the policy owner is the participant, the life insured is the covered person, the policy is a certificate, and premiums are contributions. The rest of this page sticks to the insurance terms.
In the years before your child starts university, you pay premiums and the plan builds a fund or a guaranteed sum. The insurer then pays out when your child reaches the ages set in the plan, either as one lump sum when the plan matures or as yearly instalments across the university years. Payout ages differ between plans, so match them to when your child is likely to start.
Some plans accept a child from 14 days old. The maximum entry age is 10 in some plans and 15 or 17 in others, and one add-on rider takes a child up to 18. Joining late can also cut your payout options, because at least one takaful plan pays only a lump sum at maturity for a child who joins at 13 to 15.
How Much A University Course May Cost Later
University fees rise over time, so a course that costs RM100,000 today will cost more by the time your child starts. The table shows what that course would cost in 10, 15, and 18 years if prices rise 3% or 5% a year. Those yearly rises are assumptions for this example, not forecasts.
| Years Until Your Child Starts | Cost If Prices Rise 3% A Year (RM) | Cost If Prices Rise 5% A Year (RM) |
| 10 years | 134,400 | 162,900 |
| 15 years | 155,800 | 207,900 |
| 18 years | 170,200 | 240,700 |
Rounded to the nearest RM100.
At 5% a year, the course costs about RM207,900 in 15 years, and saving that in cash with no interest takes RM1,155 a month. Your child’s course may cost more or less than RM100,000 today, so swap in the fees you expect.
Education Plans Can Be Endowment Or Investment-Linked
Most education plans are either endowment or investment-linked, and some combine features of both. Family takaful operators offer Shariah-compliant versions with their own fund and contract structures.
| Feature | Endowment Plan | Investment-Linked Plan |
| Where your premiums go | Managed in the insurer’s life fund to support policy benefits and expenses | After charges, the rest buys units (small shares) in the funds you choose |
| Guaranteed payout | May include a guaranteed maturity or cash benefit. Check the policy | The account or maturity value isn’t guaranteed and depends on fund performance |
| Extra payout | Participating plans may add non-guaranteed bonuses | Any additional account value comes from fund growth after charges |
| Who carries the investment risk | The insurer, for the guaranteed part | You. The fund value can fall |
| Charges | Built into the premium, based on the insurer’s pricing | Deducted from premiums or fund value and may include policy, insurance, and fund management charges |
Some investment-linked plans let the insurer raise the insurance charge. A higher charge can shrink your fund value or leave you paying extra premium to stop the plan from ending.
Takaful Education Plans
Under Shariah principles, a takaful education plan splits each contribution between two funds after fees. One part goes into the Participants’ Investment Fund (PIF), which holds your savings and investments. The rest is a donation, or tabarru’, to the Participants’ Risk Fund (PRF), which pays claims. Because all participants own the PRF together, you can’t take the donated part back.
Your savings in the PIF are tracked separately from everyone else’s. Payout stages and payor riders work much as they do in conventional plans, and PIDM protects eligible takaful benefits in the same way. Our Takaful vs Conventional Insurance guide has the full comparison.
What A Payor Rider Does
The payor rider applies if the payor dies, becomes totally and permanently disabled, or is diagnosed with a covered critical illness. When that happens, the insurer or takaful operator waives the remaining premiums, so you pay nothing more and the plan keeps running. What a rider covers and which premiums it waives differ between riders.
The rider costs extra. Without one, someone has to keep paying the premiums after the payor dies or becomes disabled. If nobody does, the plan lapses and your cover stops. The rider also affects your tax relief, which the tax section below covers.
Some plans also pay a benefit if the child dies or becomes disabled, but for a very young child that benefit can be lower than the plan’s full cover, so read this part of the terms.
What Education Insurance Costs
The premium depends on the child’s age when the plan starts, the payout you choose, how long you pay, and which riders you add. Starting earlier gives the plan more years to build the same payout, so each premium can be lower.
A premium of RM500 a month that stays the same for 15 years adds up to RM90,000 before any top-ups or premium increases. The insurer’s benefit illustration shows what you may get back for that money. For an endowment plan, it separates the guaranteed benefits from projected bonuses, and for an investment-linked plan, it shows projected values based on assumed fund returns. Neither the bonuses nor the projected values are guaranteed.
Compare the total premiums with both the guaranteed and projected payouts. Part of every premium pays for insurance cover and riders, not savings. So if the guaranteed maturity payout is lower than what you’ve paid in, you only get every ringgit back if bonuses or fund growth make up the difference.
Take an endowment plan that pays 40% of its sum assured when your child turns 18, 19 and 20, and 80% at 21. On a sum assured of RM40,000, that’s RM16,000 a year for three years and RM32,000 in the fourth, or RM80,000 in total. Set against the RM90,000 in premiums above, the guaranteed payouts return RM10,000 less than you put in. You only break even if the plan’s bonuses add at least RM10,000, and the illustration shows those bonuses as projections, not promises.
What Happens If You Stop Paying Early
Life insurance policies and family takaful certificates come with a 15-day free-look period from the day you receive the policy or certificate. Cancel within that time and the insurer refunds your premium, less permitted deductions such as medical examination costs.
For an investment-linked plan, the refund is the value of your units at the insurer’s next valuation date, plus any charges taken and any premium not yet invested, minus the cost of any medical examination.
After the free-look period, stopping costs money. If you surrender the plan, you end it early and get its surrender value, which in the early years can be less than the premiums you’ve paid. The benefit illustration lists the surrender value for each policy year, so read the first five years before you buy. If you stop paying and the plan lapses, what you get back depends on the plan’s terms.
Some plans allow partial withdrawals. Before you take one, check the fee, the minimum balance that has to stay in the plan, and whether the withdrawal lowers the payout or leaves too little to cover the plan’s charges.
How Tax Relief Works For Education Plans
Education plan premiums count towards the education and medical insurance relief. The limit is RM4,000 a year for premiums on yourself, your spouse, and your children, according to the Ministry of Finance. Medical insurance premiums share the same limit. If your medical premiums already reach RM4,000, an education plan adds no more relief in this category.
A relief lowers your chargeable income (the income LHDN taxes you on), so how much tax you save depends on your tax rate. If the RM4,000 comes off income that’s taxed at 11%, you save RM440. Our article on how much tax you save with SSPN and PRS works out the same kind of saving at four income levels.
Some education plans include a life insurance part. Under the Finance Act 2025, the RM3,000 life insurance relief also covers premiums on your child’s life from Year of Assessment 2026. You share that limit with premiums on your own life and your spouse’s life.
Your insurer’s annual premium statement shows how much of your premium counts as life insurance and how much counts as education or medical insurance. Our guide on claiming tax relief for insurance premiums shows how to read the statement. Not every rider qualifies, so claim each part under the matching relief using the split on your statement.
LHDN’s explanatory notes for Form TP1 set out the conditions for an education policy. The premiums qualify for this relief only if all of these apply:
- The child is the beneficiary. If a parent is the insured, the child is also the nominee.
- If the child is the insured, a payor rider must cover the life of the parent who pays the premiums, for the same period as the plan. Without it, the basic plan’s premium doesn’t qualify.
- If the payor rider is in the same premium as the plan, the whole premium qualifies.
- The maturity payout is scheduled for when the child is between 13 and 25.
- For a takaful plan, the participant is the parent, and the proceeds go to the child as a gift, called hibah.
The Finance Act 2025 sets out who counts as a child for these reliefs from Year of Assessment 2026. The child must be unmarried and fit one of these groups:
- Under 18.
- 18 or older and in full-time education at a university, college, school, or similar institution.
- Serving under articles or indentures (a formal apprenticeship) to qualify in a trade or profession.
- Physically or mentally disabled under any written law.
The rule counts a legitimate child, a step-child, or an adopted child of you or your spouse.
How PIDM Protects An Education Plan
PIDM protects eligible benefits under its Takaful and Insurance Benefits Protection System if an insurer or takaful operator that’s a PIDM member fails. Protection is automatic, so you don’t need to apply. Eligible death, disability, maturity, and surrender benefits are each protected up to RM500,000, and PIDM adds benefits together only when the insurer, policy owner, life insured, and risk event are all the same. Benefits with different insurers are protected separately. The plan must also be issued in Malaysia and be in ringgit.
PIDM doesn’t protect maturity, surrender, or income benefits paid from the unit portion of an investment-linked plan, the part of your money invested in funds. Death benefits paid from the unit portion are protected.
Education Plans, SSPN, And Bank Savings Compared
Simpan SSPN is PTPTN’s education savings scheme, with Prime and Plus accounts. Prime and Plus differ in how you contribute and in their takaful cover, so the table uses Prime. A savings account or fixed deposit at a bank is the simplest way to put money aside for a course.
| Feature | Education Plan | Simpan SSPN Prime | Savings Account Or Fixed Deposit |
| What it is | Life insurance or family takaful plan with payouts at set ages | Government education savings scheme run by PTPTN | Bank deposit account |
| Return | Guaranteed benefits plus non-guaranteed bonuses, or fund growth, depending on the plan | Annual dividend declared by PTPTN, 4.10% for 2025 and its highest in 11 years, according to Bernama. Savings are guaranteed by the government | Interest set by the bank |
| Tax relief | Education and medical insurance relief, up to RM4,000 a year, shared with medical insurance | Relief on net savings of up to RM8,000 a year, through Year of Assessment 2027. If you and your spouse file separately, only one of you can claim it | None for deposits |
| If the parent dies or becomes disabled | A payor rider may waive covered future premiums, at extra cost | Free takaful for eligible depositors aged 18 to 65 with at least RM1,000 in savings when the covered event occurs | None |
| Flexibility | Long commitment. Ending early may cost you | Deposits start from RM20 a month. You can withdraw when you need to. Withdrawals lower the net savings you can claim for tax relief, except withdrawals for your child’s diploma or higher studies | Savings accounts allow flexible withdrawals. Withdrawing a fixed deposit early may reduce or remove the interest earned |
| If the provider fails | PIDM protects eligible benefits up to RM500,000. The unit part of an investment-linked plan isn’t protected | Guaranteed by the government | PIDM protects eligible deposits up to RM250,000 per depositor, per bank |
You can open a Simpan SSPN Prime account for your child from birth, and the tax relief covers a child from birth to under 29. If your child is already past an education plan’s entry age, SSPN and bank savings are still open to you. Our Scholarships guide covers SSPN dividends and other ways to fund a course.
Paying For University With EPF Savings
EPF lets you withdraw from Akaun Sejahtera to pay for eligible education costs for yourself, your spouse, your children, or your parents, as long as you’re under 55. The course must be at Certificate Level 3 (a skills certificate), diploma, or higher at an approved institution. Local programmes can be full-time, part-time, distance-learning, or franchise programmes, but overseas programmes must be full-time.
You can withdraw up to the total tuition fees or the remaining education loan, or your full Akaun Sejahtera balance if that’s lower. EPF also covers hostel and accommodation fees, plus a one-way flight for a first-year student studying away from home or abroad. A student with full sponsorship or a full education loan isn’t eligible, but partial funding is fine. You can apply each semester or academic year. These rules come from the EPF Education Withdrawal page.
An EPF education withdrawal pays for eligible costs while the student is studying, so it won’t help you save in advance. Every ringgit you take out also stops earning dividends and is no longer there for your retirement.
When An Education Plan Fits
An education plan may fit when:
- You want to save steadily for a set goal, and the plan’s guaranteed and non-guaranteed benefits suit you.
- You can pay every premium for the full term without using your emergency savings.
- You want the premiums waived if the payor dies, becomes disabled, or falls seriously ill, and you’ll pay for a payor rider.
- You accept that an investment-linked plan’s value isn’t guaranteed and that you may need to pay extra premium.
SSPN or a bank deposit may fit when:
- You may need to withdraw the money before your child starts university.
- Your income may change during the plan term.
- You’d rather keep charges low and add money when you can.
How To Compare Education Plans
The product disclosure sheet is the insurer’s short summary of a plan’s features, charges, and risks. Check these eight points in it and in the benefit illustration.
| What To Check | What To Look For |
| Entry age and payout ages | The child’s age limit to join, and whether payouts start when your child is likely to begin university |
| Guaranteed benefits | Whether any maturity or cash payout is guaranteed, and how it compares with total premiums |
| Projected payout | The bonus or fund return the illustration assumes |
| Charges | All charges shown in the documents, including insurance and fund charges for investment-linked plans, and whether they can change |
| Payor rider | The events it covers, what it costs, and the age at which cover ends |
| Surrender value | The value in each of the first five policy years, and in the years before payout |
| Withdrawals | Whether partial withdrawals are allowed, any fee, and the minimum balance that must stay in the plan |
| Tax classification | How the annual premium statement splits the premium between life insurance and education or medical insurance, and whether the plan meets LHDN’s conditions for an education policy |
Start with the payout ages and match them to when your child may start university. Then check whether any payout is guaranteed, compare it with the total premiums, and read the surrender values for the first five years. For an investment-linked plan, less of each premium buys units in those early years, as our investment-linked plan guide shows. If the policy or certificate you receive doesn’t match what you were shown, use its free-look period to cancel it.
