If you have children or are planning to start a family in the future, you must be aware of higher education costs. If you have not yet adopted a saving plan, you might get yourself caught up in limbo. But do you know life insurance can be used as a funding source for your children's college fees? Yes, other than funds from your spouse's premature death, life insurance has a saving component known as cash value. This feature of life insurance gives an allowance of portions of your premiums to be invested.
How life insurance cash value funds education?
An essential aspect to understand is that life insurance covers are taken to provide death benefits for the loved ones as a replacement for the source of income and funeral expenses. However, permanent life insurance comes with a cash value that can be accessed through withdrawals or loans. The withdrawals and loans are dependent on the earning policy.
Benefits of using loans from a life insurance policy for higher education funding.
There are various benefits of using a life insurance policy as a source of funds for your children's education. Some benefits include the following:
When there is a positive investment in the cash value, you are not subjected to taxes on the growth unless you withdraw or cancel your policy. This brings a possibility that you might also withdraw cash values and not be subjected to income tax upon withdrawal. Also, you should consider that death benefit is income tax-free and tax-deferred accumulation.
This means that the cash value can be accessed at any time that it is needed. Compared with other sources of funds, such as bank loans, you need to go through a very hectic process, and there is no guarantee that you will qualify for the loan. Also, you have no freedom to use anyhow, unlike in the cash value life insurance.
It does not affect eligibility to other sources of funds
Whereas there are restrictions on getting a different funding source for high education- a student may be barred from accessing a particular fund after acquiring it from a different institution. Cash-value life insurance does not affect other sources of funding.
Simplicity in accessing
When you want a loan from financial institutions, there are arrays of time-consuming procedures and a lot of validations. When it comes to cash value loans or withdrawals, you only need to post a request, and your funds will be disbursed immediately.
In a cash value life policy, you have full control of the funds or the loan you request from the insurance company. Also, you can decide how the funds are to be used as there are no restrictions.
This is a good route of ensuring that your future is secured through a streamlined source of funding from life insurance that is very simple and direct compared to other sources. Make a step and contact us today for this and more exciting insurance opportunities.