Covering Your Bases on College Planning

There is a plethora of options out there in regards to college education, so when it comes time to pick the best option for your loved one, it’s important to make sure all of your bases are covered. Unfortunately, many college plans today fail to deliver the anticipated results for a couple of reasons: volatility or change. Since there is very little certainty in life, it is crucial to use a flexible college-planning tool that allows you to adapt to changes, while still providing the intended benefits. Flexibility is the key to funding your loved one’s college education. Without it, you may end up regretting it.

Traditional methods of college planning assume no other choice is available outside of going to college. These straight-to-the point products lack flexibility, which could cause the loss of key benefits should your child or loved one head down a different avenue other than attending a university. For example, if college ends up not being the preferred choice of your loved one, most traditional college plans will either default to taxable withdrawals or name another recipient of the money in order to reap the intended benefits. Although the latter is not likely to happen, either result could make you regret investing your money in a traditional college-planning vehicle should your child or loved one decide not to attend college.

A better option would be to invest in an indexed universal life policy. An IUL would allow you to fund your loved one’s education, while still reaping the benefits of tax free withdrawals, regardless of whether or not junior attends a university. This is because your tax exemption is not dependent upon your loved one going to a university like it would be under a 529 plan. This gives the owner peace of mind knowing that whatever changes they face, won’t cause them to miss out on the intended benefits. Instead, you will have added control and flexibility to adapt accordingly, without being financially penalized.

In addition to tax-free withdrawals, IUL ensures that no plan will lose money due to market conditions, which ensures the availability of the money once the time comes to use it. IUL policies adopt financial concepts that blend both annual reset and indexing allocation methods in order to guarantee that you won’t lose a penny due to market conditions. These concepts have averaged moderate returns over the last several years through the ability to bypass market downturns with capped earnings.

Flexibility is another key benefit for investors within an IUL policy. Deposits made into an IUL policy can be either structured or sporadic.  Meaning you can structure your policy to get favorable results through either lump sum deposits or consistent monthly deposits. 

Last, but not least, an IUL can bring peace of mind through total protection. For instance, if the bread winner of the IUL policy were to pass away, the beneficiary (often the potential student) would receive an accelerated tax free death benefit to ensure payment of the education.

If the past decade is any reflection of what is to come, protecting your money with underlying guarantees can minimize the stresses connected with providing an education for your loved one. Unpredictability and uncertainty have been more prevalent over the last five years than any other time in US history. If this pattern continues, what guarantees do you have in regards to your loved one’s higher education needs? Utilizing an IUL for your college planning needs is definitely a great way to bring security into an insecure financial world.