Misadventure of the education savings funds

An article in the Sunday papers today mentioned about using an Endowment Insurance to fund an education fund, providing the benefit of both a $100,000 protection, as well as contributing to the education fund.  This may well be the second worst option.  It is certainly a reasonable option if one was not prepared to put aside the time to manage such a fund.  So I'm not saying it's no good.  It's just that there are better ways to do so.

For one, why bother with that $100,000 protection when the child has no dependencies?  Unless of course, the parents are close to retirement and their retirement plan assumed that the child would be supporting them with $4,000 a year.  [Consider: $100,000 @ 4% returns.]  Even then, that need could be better met by a Term Insurance, which would probably be far cheaper.

But what is the worst option?  That, was precisely what we did, saving a monthly sum into a Savings Account, for years and years.  We had opened Savings Accounts for each of my kids, contributing $100 each month.  On top of that, was a further $500 annually from their "Ang Pows" that they receive during Chinese New Year.  After several years, I discovered that all we had accomplished was a paltry sum of $7,000 in each account, a far cry from the $80,000 that I had estimated to be needed, with less than 10 years to go! 

In my parents' age, it probably made sense when savings account were giving 5% interest.  But with interests down to the doldrum of zero, that assumption of good returns from keeping money in the bank no longer works.

I've since switched to a different approach, through investing in unit trust funds.  After closing the Savings Accounts, the $7,000 were used to buy into a spread of unit trust funds - i.e. an index fund for US equity, index fund for Europe equity, Global Emerging Mkt equity, Asia-Pacific ex-Japan equity, Singapore equity, and a global bond fund, and topping up $500 monthly.  Now, with 8 more years to go, the respective funds are at $20,000 and seem on track.  I hope.

As a sensitivity analysis, even if the investment portfolio end up with nil returns, it would still be:
$20,000 + ($500 x 12 months + $500 ang pows) x 8 years =  $72,000   (i.e. 90% of target)

Of course, there is no insurance against a repeat of the 2008 global financial crisis. To mitigate the risk,  I would have to remember in 3 years time (i.e. 5 years before the need), to start switching increasingly to a more conservative portfolio profile, either holding in Money Market funds, or in SGS Bonds that would mature before each of the 8th, 9th, 10th and 11th year.