Have you considered how you can use your life insurance policy to pay for your children’s tuition and expenses? Kensington’s cash value loans can give you the cash flow you need to support your children’s education and set them on the right path for their future.
The last three decades have seen college tuition increase upwards of 260%, which can cause any family to panic about the impending hardship of saving for their children’s education. A child born today might expect to spend approximately $250,000 to cover the in-state tuition at a public university for a 4-year degree, not including room and board, books, or travel costs. This might cause some families to throw in the towel before they’ve even begun, which could force them to tap into retirement savings later on or could leave the student saddled with debt before they even earn their first paycheck.
The number of alternatives marketed to families for the purpose of college planning can cause analysis paralysis. Should they set up a 529 plan in or out of their state for little Paige? How about a pre-paid college plan? Not to mention the tax implications both now and upon withdrawing from these strategies.
One solution that most families don’t typically consider is using their existing life insurance. Perhaps you’ve considered taking a line of credit against your 401(k), a retirement account, or your home. Have you considered leveraging your life insurance as collateral for a college planning loan? Taking advantage of a whole life policy to cover college costs has the benefit of locking in low premium rates for the life of the policy while ensuring the tax-free growth of cash-value. Whereas other college savings vehicles are considered in the calculations for financial aid, life insurance policies are not included in the federal methodology, which means that the student and their family will not be penalized for having saved for college. Best of all, a life insurance policy generates flexibility, providing benefits that surpass the family’s college-planning needs.
As the cash-value of the life insurance policy grows, Kensington Financial Associates can help generate the most efficient implementation of the strategy through its low-interest rate and no-credit-check approach to cash-value lending.
This strategy requires that parents, even grandparents, begin planning early. Though, if your student is college-bound soon, don’t despair. Kensington can also help provide liquidity for their tuition through a cash-value loan based on their parents’ or grandparents’ policy. Unlike other restrictive college planning strategies, the whole life cash-value loan can be utilized for any of the expenses that the student might incur for their education, even if they are not direct relatives of the policy-owner, and without cumbersome credit checks, there will be no impact to their borrowing power.
Together, we can contribute to a successful and less stressful college experience for both students and their parents, giving them time to focus on SATs, semester planning, and those brilliant essays!
Learn More About Whole Life Insurance for College Planning in our College Life Plan Brochure