Life Insurance for College Planning

 You can use a life insurance policy to finance your children’s college education.

 I’ll bet many of you folks out there didn’t even realize that you could.

College and university tuitions have skyrocketed over the past 2 decades, and many of your kids who take out loans start off life with a huge debt looming over them.

 How Expensive Is College and University Tuition?

 If you have young or teenage children, you want them to get the best start in life.  A college or university degree is pretty much the way to go if you want your kids to have a successful and financially comfortable life.

 But, it’s not cheap!

The National Center for Educational Statistics has some pretty startling news about how much education costs.  The average cost for a 2 or 4 year undergraduate program which includes tuition, and room and board for the academic year of 2010 – 2011 breaks down as follows:

Average Annual Cost for Public Institutions                                 $13,600
Average Annual Cost for Private (For Profit) Institutions             $23,500
Average Annual Cost for Private (Not for Profit) Institutions       $36,000

This is a heck of a debt load that both you and/or your children will be facing as the cheapest 4 year program would be $54,000. 00 while the most expensive college program would work to $144,000.00.

 We all want out kids to have the best in life and give them a helping hand because that’s what every parent wants to do.  But many people simply can’t save enough, if anything at all, especially with all their other debts such as a mortgage, personal loans and credit cards.

 So!  How can a life insurance policy help solve this dilemma?

Permanent Life Insurance as an Asset

Everyone wants to protect their family financially which is the reason they buy life insurance in the first place.  First of all, forget about term life insurance policies altogether.  They can help, but only if you die because they pay death benefits only.

You want to help the kids while you’re still alive right?

The way you can help finance your kid’s education is to buy a permanent life insurance policy.  The big difference between a term life insurance policy and a permanent life policy is that the permanent policy has a cash value accumulation feature.  It is also an asset because it has liquidity which I’ll explain about further on.

There are 3 types of policies which you can buy which include whole life, universal life and variable life.  All 3 types of these policies have a cash value accumulation component.

How does the Cash Value accumulation Work?

When you pay your premium the money is divvied up 3 ways.  A portion goes towards your death benefits.  A portion goes to the administrative costs of managing the policy.  And the third portion goes towards the cash value accumulation portion. continue page 2……