01 Oct How to Leverage a Life Insurance Policy For College Tuition Costs
Paying for college tuition is seldom easy. Most parents start as soon as their baby is born, saving and scrimping so that when the big day finally arrives, their child can attend the best university possible. Saving for college isn’t a bad idea. Every bit helps, after all. But families sometimes wonder if saving was the right idea. Student financial aid programs always ask about existing college savings accounts. The more you have saved, the less financial aid you may qualify for.
A “Secret” Tool For Maximizing College Money
What if there was a secret tool to save money for college without being “penalized” for having that tuition money available? There actually is a way. Although it’s not a true secret, it is something that few people know about. But when you do find out about this tool, just like saving from birth, the earlier you start, the better.
Leverage Whole Life Insurance For College Tuition
Life insurance benefits do not need to be disclosed on any financial aid form. Specifically, you can carry a whole life insurance policy and, even though you intend to use it for college tuition, you don’t need to tell the financial aid department. In fact, there’s not even a line on any financial aid application where you can report life insurance benefits.
How it Works
Here’s how it works and how to do it. First, you should know that not all life insurance policies will work with this strategy. You’ll want to find a cash value policy, such as a whole life policy or universal life policy. These types of insurance policies carry a cash value that you can claim any time you like. Of course, the longer you pay in, the more you can get out. The value increases over time. What people often forget is that money is theirs to use however they want, including for college tuition. The other end of this strategy is that the money you take out of a universal or whole life policy for purposes of college tuition need not be disclosed to any financial aid organization. So you and your college-bound genius can take advantage of both financial aid and the cash value of the whole life insurance policy.
Life Insurance is Still Needed
Note that if you plan to start a whole life insurance policy for your newborn or youngster for tuition purposes, you should still get a separate life insurance policy. The second one can be whole life or term life, but it can pay out should anything fatal happen to you or the main provider in your family. Remember that using whole life insurance policy money to pay for tuition means that money is gone. There won’t be another payout upon the death of the policyholder.
Leveraging a life insurance policy is just one extra way to help pay for your child’s college costs. And in this day and age, every penny counts. Contact your advisor at Accolade Financial to learn more.