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Saving for College Using Whole Life Insurance

September 22, 2020

With college tuition steadily increasing, saving is only getting more difficult. It is not uncommon to hear many of our clients with newborns already discussing college savings. While you may not be ready just yet to send your child off to university, a bit of planning today can possibly lessen the financial burden later.

Whole life insurance can be a great tool to help you save for the cost of education. Along with guaranteeing a death benefit, whole life insurance includes a cash value account that grows tax deferred.1,2,3 Assuming you buy the policy when your kids are very young, by the time they head to college, you can withdraw the money or borrow against the policy to help pay for college.4

At Northeast Financial Network we are dedicated to helping you making paying for college easier. We understand that saving for college is difficult and want to provide you with the resources you need as you start creating your strategy. Check out this helpful flyer to learn more about how whole life insurance can help you save for education expenses!

1 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
2 Some whole life policies do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
3 Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
4 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.