Worrying about Paying for Your Children’s College Education?

See how whole life insurance can help

Springtime—it's the season of renewal, as birds return to our gardens, flowers and trees start to bloom around us, and the grass begins to turn green and lush. If you have children in high school, it’s also the time you may start seriously thinking about how you’re going to pay for college. Whole life insurance may help.

College Planning and Whole Life Insurance
Whole life insurance can be a powerful tool in the college planning process because while many scholarships reward merit, most financial aid is based on need. To receive financial assistance, a family or student must complete the Free Application for Federal Student Aid (FAFSA), which can be filled out online at www.fafsa.ed.gov.

The FAFSA website will guide you through the free application process. To complete the application, however, you’ll need your federal tax information or tax returns, including IRS W-2 information, so it’s advisable to fill out the application after you’ve prepared your tax return for the previous year. Information on the application is then analyzed using the federal methodology formula which analyzes income, assets and number of children in the family to determine what the family is expected to contribute toward the student’s education.

While money in stocks, certificates of deposit, bank accounts and 529 plans is factored into the formula, permanent life insurance isn’t. Therefore, children whose parents have a portion of their assets in a cash value life insurance policy may have a better chance of qualifying for more financial aid than children whose parents have the same net worth and income who have not utilized the same planning technique. So just by reallocating assets, you may improve the chances that your children will become eligible for more scholarships and grants.

Three Benefits of Using Whole Life for College Planning

• The cash value of the policy is not considered in federal financial aid calculations

• The policy’s cash value can be accessed through tax-free loans or withdrawal/surrender of the paid-up additional insurance rider to pay a portion of college costs. If the policyowner doesn’t use the cash value for educational funding, it can be used later to buy a house or a car, supplement retirement, or for any other purpose.

• The policy provides a guaranteed death benefit which can be used to pay college costs if the insured dies prematurely.

Contact your insurance representative or Mutual Trust today to learn more about how you can use life insurance for college planning.

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