A Safer Alternative for College Planning

For years, most people have been led to believe that the money placed inside of qualified plans – such as those that are used for retirement and college savings – should be invested in volatile financial vehicles like stocks and growth mutual funds. One of the primary reasons for this is because these types of investments can oftentimes better meet or beat inflation due to their POTENTIAL for a higher return.

But what happens when (not if) there is a market “correction,” or even a downturn in the value of individual investments – especially just prior to the account holder starting to take their withdrawals?

The answer: It typically doesn’t have a very good outcome.

But there are other avenues that can allow for a nice, consistent – and compounded – growth of principal that clients can count on year in and year out, and that also allows for keeping those funds safe, regardless of what occurs in the stock market.

This is through the use of permanent, cash value life insurance for college planning.


Why Consider Permanent Life Insurance For Clients’ College Funding Needs?

Most people only consider the death benefit aspect when it comes to life insurance. But because permanent life insurance offers additional benefits, there are a number of reasons why this tool should be an integral part of one’s overall college funding strategy.

First, the money in a permanent life insurance policy is allowed to grow tax-deferred. This means that there is no tax due on the gain unless or until the money has been withdrawn. Because of this, the funds that are in a life insurance cash value have the ability to snowball – particularly if the policy holder purchases it many years before the cash is needed for educational expenses.

Also, unlike most “traditional” college savings plans, the money that comes out of a life insurance cash value is not required to be used only for education (or education-related) costs. This means that if the student opts not to further his or her studies, there are no penalties for using the money for other needs – or even for allowing the funds to remain inside the account and continue to grow over time.

There is another way that life insurance provides an added advantage over the more traditional college funding vehicles, too. This is the fact that if something should happen to the insured, there is still the promise that money will be available to the student.

As an example, let’s say that a parent or grandparent starts a 529 college savings plan for a child. But after just one year, the unimaginable happens, and the adult passes away. At that point, there is likely very little that has accumulated in the college savings plan. But if that person chose life insurance as their funding vehicle, the death benefit would be paid out, still ensuring the child of a certain dollar amount for their future college expenses.

In addition, as an added bonus, if the policy holder has already “maxed out” his or her qualified retirement plan and / or IRA (Individual Retirement Account), they can continue to contribute to the life insurance policy, in turn, allowing for another avenue for tax-advantaged savings.


Ensuring Safety and Growth with Your Clients’ College Planning Funds

Why should clients have to take a gamble in the stock market with money they know they will need at a certain date in the future?

When they use permanent life insurance as a component of their college savings needs, they don’t have to – and you can provide them with this solution.

If you want to join thousands of other insurance professionals who are showing their clients how to grow money safely and consistently – and who are generating a nice commission income while doing so, then give us a call now, toll-free, at 1-800-643-6143.


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Brian J. Kay, Executive Director, Leads4Insurance
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