Tuition costs have nearly tripled over the past quarter-century – good enough reason to start planning for your child’s university or college education.
With the average cost of a post-secondary education in 2010-2011 at $58,000 – and climbing – and with the maximum contribution to registered education savings plans (RESPs) set at $50,000, you may be looking for other ways to fund your child’s education. Life insurance can help your children fund their post-secondary education if you or your partner die unexpectedly.
Insure Your Child
How does it work? Most permanent life insurance products offer a guaranteed cash value accumulation component that allows the cash value to grow tax-free (within limits).
When it’s time to withdraw funds for your child’s education, you can either withdraw the accumulated cash value or take out a loan against the policy’s accumulation. If you take out a loan, your cash value can continue to grow, provided you repay the loan. Alternatively, you can surrender your insurance policy if coverage is no longer required and apply this money to your child’s education needs (tax may apply).
Purchasing participating life insurance for your child or grandchild is a gift that keeps on giving. A participating life insurance policy has cash value that can grow over time and can be accessed to pay for things like tuition, a new car, or a down payment on a house. With their insurance needs taken care of for life, they can focus on other key priorities.
I can help you make sense of using permanent life insurance to pay for tuition.