Most people have heard of a 529 account, but there are other ways to save for your child’s education. What if your children decide not to go to school? What if they want to use that money for real estate, starting a new business or taking a trip overseas?
TAX ADVANTAGES
Life insurance offers certain tax advantages. In the event of your death, your family can choose to use the income tax-free death benefit to pay education costs. And with some types of life insurance, you can take loans against your policy without tax penalties.
ADDITIONAL FEATURES
Be sure to take into account these additional features when planning for your kids’ college funds, available with certain types of life insurance:
- Guaranteed cash value, so you know a certain amount of money is available
- Access to your money, so you can use it for tuition and other educational expenses
- Market participation, so your policy’s value has the potential to grow based on the performance of investments in your policy
TERM AND PERMANENT LIFE INSURANCE
If you simply need to pay for your child’s college expenses in the event of your unexpected death, consider term life insurance and you can choose the length of time you need coverage and the amount of death benefit you need.
With permanent life insurance, you may be able to take withdrawals or loans against your policy’s cash value, which can continue to grow tax-deferred. This may be an option if you’ve maximized your 529 plan, which also offers tax-deferred growth and tax-free withdrawals for higher education expenses. Talk with your agent about how you may be able to use permanent life insurance to help with college expenses.
If you have questions about how to best use your life insurance portfolio to provide for your children’s education please reach out to us at (760) 271-6651 or via email.