Life Insurance can be a better option for college funding.
Many parents have heard of 529 plans in their state and believe that it is the best savings option for their child’s college education. While 529 plans work for some, they’re not the safest education savings option available. Index universal life insurance offers a savings plan that has fewer restrictions and can be a safer option for your child’s future.
With 529 accounts, you will likely have to pay taxes on the money you take out. You’ll also have to use the money for educational purposes only, or pay hefty penalties if you’d like to use it for anything else. Some 529 plans also have market risk, which means that you could lose money if the market decreases.
Index universal life insurance doesn’t have any of those problems. You will not have to pay taxes on the money that you withdraw from the policy, and the interest that you earn is tax deferred. This savings plan does not have any restrictions on what you can or cannot use the money for; this means that there aren’t penalties for using it for costs other than education, and you can access the cash value whenever you’d like. There is also no market risk. You will gain interest when the market is up, but won’t lose money when the market is down. Most 529 plans can’t offer a savings plan without a ton of restrictions and/or market risk.