We're now in the month of August, which means it's back to school for many. For clients with children, college funding may be stressful.
Consider this: Married couple, two kids.
Seems like your standard family, right? What few think of when considering the “standard” family is the amount of things they must pay for. There’s a mortgage, car payments and other bills, education for now, funding for college later, a savings account for trips or rainy days, medical coverage, and retirement.
Many families are looking for new ways to save for college tuition.
It is quite common for families to either save here and there as best they can, take out loans to pay for tuition, or “wing it”—figure out college tuition when they get there. It’s alarming that these three tactics occur all too frequently.
There’s a better way.
A life insurance policy can provide funding for college tuition. The funds won’t run out like a typical savings account can. College loans come with heavy interest rates and take years to pay, sometimes decades. A life insurance policy is quite the opposite. Paid premiums increase the cash value accumulation. And obviously there’s no “winging it” necessary. Instead, clients have a defined plan.
In essence, life insurance offers a guaranteed and accessible cash amount. Your clients will know exactly how much they have available for tuition and the funds can be used on educational expenses. One of the best advantages, though, is that in the case a client’s child opts out of college, the life insurance funds can be used elsewhere (emergency, retirement, etc.).
Finally, ask your client what the plan is if they or their spouse pass.
Without a life insurance policy, the family is reduced to one income, which likely cannot be used for college tuition. It’ll surely be used for debt, bills, and burial services. By utilizing a life insurance policy, the children of policyholders can ensure their educational plan will remain somewhat intact, even in the event of death.
When using a life insurance policy for college funding, your clients will be able to preemptively check “children’s college savings” off as complete.
During the month of August we’ll be looking at how clients can use whole life insurance to efficiently plan for college, the benefits of using this product as a college funding tool, and then we will compare it to a few of the other alternatives such as 529 plans.