Saving for College

The College Board estimates that the average cost of four years of private college in 2010 will be $180,000. For anyone with children, the estimated cost of a college education can be overwhelming. There are a number of financial models for saving for this huge expense – Life Insurance Info reviews life insurance as a component of college savings.

College and Permanent Life Insurance

A permanent life insurance plan is one option to consider for building your college savings. This type of policy builds cash value, allowing you to borrow against the value tax-free. This money can be used to pay tuition or other expenses. Keep in mind that any amount borrowed from the life insurance policy is subject to interest charges and, if unpaid at the time of your death, can result in a reduced death benefit.

In addition to the fact that you can borrow against your policy, the very nature of a life insurance policy is to provide protection in the event that you become disabled or die. Without a policy, your family will not be financially protected after the loss of your income. With a policy in place, in the event of your death, your college savings plan is protected.

Pay your child's tuition with life insurance. Request a quote today!

Term Life Insurance for College Fees

The main goal of a term policy is to provide protection from anything happening to your child's college savings in the event of your death. Term life insurance can be purchased for a specific period of time, or term. Should you die during the policy, your family will receive a tax-free payout that can be used for, among other things, funding a college education.

• Any assets you put into the trust must remain there.
• Beneficiaries cannot be added or removed.
• The appointed trustee can only be changed if that person agrees to resign.
• Irrevocable trusts allow you to enjoy tax savings since the beneficiary of the trust pays the income taxes on any earnings.
• You lose the option of borrowing against the cash value.

Estimating Future College Costs

The Fidelity.com website features an article in the 'Investment Products' section titled "Help Protect Your College Savings With Term Life Insurance." There, you can find Fidelity’s College Planner Calculator to estimate future college costs, as well as Fidelity's Insurance Needs Calculator to estimate your coverage needs for a college savings plan. The 'Customer Profile' included in the article provides a scenario of the calculators in action:

"Bob and Sue, both 38, have one-year-old twin girls that they would like to send to a private four-year college in 17 years.

Using Fidelity's College Planner Calculator, they estimate that in 17 years, with a college inflation rate of eight percent, the projected cost of attending a private secondary institution will be approximately $446,357.

Next, Bob and Sue use Fidelity's Insurance Needs Calculator to estimate the coverage they might need to help insure their future college savings. Because they now have an estimate of future expenses, the calculator helps them estimate that a $500,000 policy may cover their needs. They both purchase insurance because the family's budget depends on both incomes.

Bob and Sue get a term life insurance quote online and discover that their preferred level of coverage will cost them less than $40 a month each."

From this example, you get an indication of how affordable coverage can be to insure your children’s college savings. Start now by obtaining a free life insurance quote.

Life-Insurance-Info.us is not a life insurance broker or carrier, and cannot issue life insurance policies. This site provides free information on insurance providers and coverage options. We are not associated with the companies profiled on Life-Insurance-Info.us and we make no representation, express or implied, that you will receive a quote from a specific company profiled herein. Products and policies may not be available in all states, and product and policy information is subject to change without notice. Please contact the insurance company directly to answer your policy inquiries.