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Life Insurance And College Education

Life Insurance And College Education

According to an estimate by the College Board, the average cost involved for four years of private college education in 2010 will be about $180,000. For anyone, this cost of education for their children can be an overwhelming affair. A number of financial models exist to save for these huge expenses. Quickhealthinsurance helps you to find more about life insurance for college savings.

Permanent life insurance and College

One of the best options for meeting the rising cost of college education cost is to buy a permanent life insurance plan. The policy builds cash value, thus helping you to borrow tax-free against the value. One can use the money to pay tuition or some other expenses. However, it must be remembered that the money that is borrowed from the life insurance policy is chargeable and if unpaid when you pass away, can lower the death benefit.

Your policy provides the much needed protection in the event of your death or becoming disabled along with the facility to borrow money against your policy. If you do not have a policy, your family will not find itself financially protected in the event of your loss of income. If you have a policy, and you pass away, you can rest assured of protection of your college savings plan.

Term life insurance and college fees

Protecting your child's college savings in the event of your death is the main goal of a term policy. One can buy term life insurance for a certain time or term period. If you die during the life time of the policy, your family stands to receive a tax-free payout which can well meet funding for a college education, among other things.

  • All the assets that are put into the trust must remain there.
  • No beneficiaries can be added or removed.
  • As the beneficiary of the trust pays the income taxes on their earnings, irrevocable trusts permit you with tax savings.
  • The change of the appointed trustee can only be changed if that person agrees to resign.
  • You do not have the option to borrow against the cash value.

Future college costs estimate

A popular website is for estimating your college cost. In the website, an article in the section 'Investment Products' provides College Planner Calculator for estimating your future college costs along with Fidelity's Insurance Needs Calculator for estimating your coverage needs for college savings plan. A scenario is provided in the 'Customer Profile' in the article describing the method of the calculators in action:

Bob and Sue, aged 42 and 40 years have two girls of one year and they plan to send both of them to a course of four year in a private college after 17 years. They make use of the Fidelity's College Planner Calculator and estimate the future cost of studying in a private secondary institution, taking a college inflation rate of eight percent, to be approximately $446,357.

Next it is the Fidelity's Insurance Needs Calculator that both Bob and Sue use to calculate the coverage they could need to meet the insurance of their future savings for college education cost. With future expenses estimate in hand, they make use of the calculator to estimate that for a policy of $500,000, they can well meet their needs. Both of them together buy the insurance as both their income are used to meet the family's budget.


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