Plan Today for a Brighter Future Tomorrow

While it’s better when your child is young to start the college investment cycle, it’s never too late to start. No matter the age of your kids, what matters is that you are preparing now. Thinking about these costs is easy to put off hoping your child will obtain scholarships or financial assistance. I don’t always count on them. While these awards help with college tuition, they are not guaranteed, not always comprehensive, and not available to everyone.

Investing for a Younger Child’s Education

When your child is young, time is with you. Since you will have plenty of time, you will be able to spend less money now and let your savings do more of the work for you, thanks to the potential impact of compounding returns.

Investing for an Older Child’s Education

Don’t worry if your child is already in secondary education. While you will need to spend more money within a shorter time span, you will still be able to afford at least a portion of the college costs.
Look carefully at choices that do not require strict contribution caps, because they could be more suitable for you now.
Speak with your child about specific goals, too. What schools does he or she interested in? Is college an option or does your child have a vocational school with his or her sights? Many policies restrict the options of the beneficiary so knowing the desires of your child is crucial.

Which Plan is Right for You?

With several different options available for college savings, it’s important to select the one that suits you. You can be discouraged from optimizing your savings by choosing the wrong plan – or not investing appropriately inside the right one. With the assistance of our professional guidance, however, it can be easy to select the right alternative.

Advantages of Whole Life Insurance for College Savings

1. Guarantees
   Whole Life insurance, also known as permanent life insurance, is structured so part of your premium pays for the insurance, and part goes to a separate cash value account. The cash value grows at a steady rate with minimum guarantees every year.
   The guarantees are typically low, around 3-4%, but again, they’re guaranteed.
   Keep in mind that mutual companies will pay dividends in addition to the guaranteed rate, so in reality you end up with the guarantee plus another 2-7%.
   2. Tax-Advantaged
   These life insurance for college savings plans are funded with after tax dollars and are therefore able to grow tax deferred. You are always able to withdraw your basis (the
   3. Few Contribution Limits
   There are limits on how much cash value you can have, but they relate to the amount of insurance you have, and the timing of the contributions. However, with respect to saving for college, the limits for paid-up additions are well in excess of any ivy-league college costs.
   4. Hidden to Financial Aid
   Life insurance cash values are not considered when applying for financial aid.
   So, even if you have over $100,000 in cash value, it won’t be seen by those considering your child’s financial aid eligibility, such as the FAFSA program. You don’t list any cash value in a life insurance policy on a FAFSA application. That is a BIG deal.
   You see, this is of tremendous value when it comes to applying for financial aid, because there are so many options available to families looking for financial aid. And normally, if you have $100,000 in a bank account, a 529 Plan, stock accounts, mutual funds, etc., that money will count against your child’s financial aid eligibility.
   5. International College Funding
   This may not be something you’ve considered, but for the purpose of the comparison with the 529 plan vs life insurance it need to be mentioned.
   Life insurance cash value can be used to fund college expenses anywhere in the world. There are no limits to what your child’s college or University can be.
   6. Flexibility
   Ultimately, the money inside a whole life cash value policy can be used for whatever you want and whenever you want, with very few restrictions.
   There are no early withdrawal penalties.
   There aren’t any distribution guidelines.
   And you won’t have to worry about qualifying expenses.
   Essentially, the cash value is all your money and you can do with it as you choose.

With all the demands and decisions that new parents face, in that early stages-college-one significant thing is sometimes unintentionally overlooked.

Don’t let your family fall apart in the event of your death. Protect them with life insurance.

College Planning Products 

Life Insurance
While the main purpose of life insurance is to pro­vide money to your family after your death, it can also be used to fund higher education expenses. While purchasing a policy for college savings alone is inappropriate, the cash value of your whole or universal policy may be used to pay for such expenses. 

529 Savings Plans

These State-sponsored programs provide versatile, tax-friendly ways of saving. 529 Savings plans offer multiple benefits compared with other savings plans.

Although there are many advantages 529 savings plans provide, there are potential disadvantages. Earnings are taxed and subject to a 10% penalty when withdrawn for uses other than qualified education expenses. The portfolio allocations may only allow for changes once per year or upon a change in beneficiary.

529 Prepaid Plans

These plans allow you to purchase a certain percentage of tuition over time that is guaranteed to be equivalent to the same percentage of tuition in the future. We can assist you in determining if a 529 prepaid plan is available in your state.

IRAs

You can withdraw funds from your IRA to pay qualified higher education expenses. While this may seem like a viable savings option, remember that you will be spending your retirement savings. In addition, amounts withdrawn may count as income and affect eligibility for need-based financial aid.
The 10% penalty tax for withdrawals is waived when funds are used for higher education purposes, but the money may still be subject to income taxes.
Typically, if you own a traditional IRA, the full amount will be taxed, while Roth IRAs allow tax-free withdrawals in certain circumstances. Discuss this issue with us to determine if your withdrawal will be subject to taxation.