The enormous cost of higher education can be scary, but with the right financial tools, you don’t have to face it alone. Whether you’re a parent saving for your child’s future or you’re preparing to go to school yourself, financial products can help you create a smarter, more sustainable plan for college — because the right financial tools today can mean less student debt tomorrow.
Here’s how:
1. Use Life Insurance for Education Goals
Many permanent life insurance products, like whole life or indexed universal life (IUL), often include a cash value feature that grows over time. Over time, this amount can be accessed (with tax advantages) and used toward college expenses.
An added benefit? The cash value in a life insurance policy is generally not counted as a reportable asset on the FAFSA — unlike 529 plans, which can reduce financial aid eligibility. That means you may be able to save for college without impacting your chances for financial aid. Plus, the policy provides built-in protection, helping keep your education plan on track even if life takes an unexpected turn.
Certain financial products can offer both protection and flexibility for your college plan.
2. Consider Annuities for Protected Payouts
Fixed annuities can be a great way to create predictable, steady income over time that aligns with future education expenses. By placing a lump sum into an annuity ahead of time, you can generate consistent cash flow to help pay for college, providing peace of mind and shielding you from market fluctuations during high-expense years.
3. Pair With 529 Plans for Maximum Effect
529 college savings plans are tax-advantaged and ideal for direct education costs, but even they have limitations, like penalties for non-qualified withdrawals. Luckily, they aren’t your only option.
By pairing a 529 with financial products like IULs or annuities, you gain both tax benefits and greater flexibility. Also, if your child decides not to attend college or earns a scholarship, these additional tools offer alternative uses for the funds without penalty.
4. Plan for Risk Coverage
Life doesn’t always go according to plan. Critical illness, disability, or sudden job loss can make even the best college plan hard to stay on track. Supplemental protection through insurance ensures your ability to fund education goals isn’t completely dependent on current income or job security. It adds a layer of certainty when the unexpected occurs.
5. Get Help from a Financial Professional
The most financial plans are personalized, and this includes college funding strategies. A licensed financial professional can help you evaluate options based on your goals, income, and risk tolerance. They can build a plan that considers tax strategy, inflation, timing, and potential financial aid — all tailored to your unique situation.
The right financial tools today can mean less student debt tomorrow.
College doesn’t have to equal student loan debt. Certain financial products can offer both protection and flexibility for your college plan. With the right mix, you can plan smarter and give your family the freedom to pursue education without putting too much weight on your financial future.
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