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Today, more than ever before, the high cost of college can present incredible challenges, even for high-net-worth individuals. Thus, many people seek financial solutions that can assist in securing education for their children and offer flexibility for the times that other needs arise. Section 529 plans are one type of plan that can be used to save for educational purposes, but they should not be considered the only option. Another formidable option is permanent life insurance, which can help improve your overall higher education savings plans.

When permanent life insurance is used to fund the costs associated with higher education, the policy’s death benefit protection along with cash value accumulation can be utilized to ensure you are on track to achieve the college savings you need. At the same time, this strategy provides the flexibility to access cash value for non-educational expenses without incurring penalties.


Among key benefits of using permanent life insurance to fund higher education are:

  • It ensures college savings goals are still met if parents pass away prematurely
  • Cash value and policy death benefit are available for non-education purposes without any special tax penalties
  • Permanent life insurance, sometimes referred to as “Whole Life,” can offer protection from market fluctuations (depending on the product chosen)

Incorporating life insurance—both permanent and term—into your overall college funding strategy can be a great way to help ensure your children’s college plans don’t get put on hold because of concerns such as 529 plan limitations, continuing rising college costs, or massive college debt. Life insurance can be a great supplement to a funding strategy you may already have in place. Having this type of strategy in place can help alleviate some of your biggest concerns, which in turn will provide you great peace of mind.

Why consider life insurance for college planning?

There are several reasons to consider life insurance for college planning. Among these, it’s worth noting that such a strategy provides:

  • A tax-free death benefit to help ensure children of any age can attend college if you were to pass away prematurely
  • Tax-deferred cash value accumulation to help meet the challenge of rising costs
  • The ability to access your cash value income-tax-free for tuition or non-educational expenses, such as smart phones, travel, or even paying off college loans
  • Protection from market downturns, depending on the life insurance product you choose and how you allocate policy values
  • Options to ensure your coverage continues if you become disabled
  • An asset that is not counted when applying for federal financial aid (FAFSA).

If your child receives a scholarship, attends college out of state, or takes a different life path altogether, your policy’s cash value and death benefit can be used for anything at all, without a tax penalty.

Incorporating permanent life insurance into your college savings plan is a solution worth looking into.

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