college funding

Funding A Dream

An Indexed Universal Life Policy

You don’t have to die for this plan to work. A permanent life insurance policy, can actually help pay for college costs. A policy that accumulates cash value, such as an indexed universal life policy, can provide a way to help pay for college costs.

Benefits:

Tax-deferred growth — Cash value growth inside the policy is tax-deferred.
Policy loan options — Access cash value from the policy to pay college costs through policy loans, which are generally free from income tax.
If plans change, the growing cash value in the policy can be used as tax-exempt retirement income, down payment on the purchase of a future home, or car, or to fund a business start-up, ongoing emergency /opportunity fund. There are no limits.
The parent or grandparent policy holder can maintain ownership and control of the policy until they feel ready to pass it to the maturing child.
The death benefit can be accessed while still living and can be used to fund chronic, critical or terminal illness expenses, should the child become seriously ill.
Children do not need to medically qualify to purchase a plan.

This fall, millions of American students will enter college for the first time. For many of them, their college journey began when loved ones started planning and saving to make the college dream a reality. Like you, these families had lots of questions along the way. And that's why we're here — to help you get started with your college planning.

Find out more

other funding options ...

Education Savings Account (ESA) or Education IRA

An ESA allows you to save $2,000 (after tax) per year, per child. Plus, it grows tax-free! If you start when your child is born and save $2,000 a year for 18 years, you would only invest $36,000. While the rate of growth will vary based on the investments in the account, you’ll likely earn a much higher rate of return with an ESA than you would in a regular savings account—and you won’t have to pay taxes when you withdraw the money to pay for education expenses.

Benefits:

Variety of investment options
Grows tax-free

Caution:

You must be within the income limit to qualify
Contributions are limited to $2,000 per year
The amount must be used by the beneficiary by age 30

529 Plan

Education Savings Account (ESA) or Education IRA

If you want to save more for your children’s college education, or if you don’t meet the income limits for an ESA, then a 529 Plan could be a better option.

Look for a 529 Plan that allows you to choose the funds you invest in through the account. Be cautious of using a 529 Plan that would freeze your options or automatically change your investments based on the age of your child.The right 529 Plan will also give you the option to change the beneficiary to another family member. So if your firstborn decides not to go the college route, you can still use the funds you saved for the next kid in line.

Benefits:

Higher contribution rates (varies by state, but generally you can contribute up to $300,000)
Most of the time, there aren’t any income limits or restrictions based on age
Grows tax-free

Caution:

Depending on the 529 you choose, you may be subject to taxes and penalties if the distributions are not used in accordance with the plan rules.
Restrictions may apply if you choose to transfer your 529 Plan funds to another child.