The prospect of being able to fund the costs of your children’s college education can feel daunting. Particularly if your children want to go to a private four-year university directly out of high school, you are probably wondering how you’ll afford a $50,000+ annual tuition bill and all of the ancillary living expenses. Fortunately, there is a solution.
How a whole life insurance policy works:
- You become your own bank: When you take out a whole life insurance policy, you become your own bank; you can borrow against the cash value to fund whatever you’d like, including your kids’ college education. Your policy retains all of the other benefits even after you borrow against this cash value.
- You set repayment terms for your kids (or for you): When you use traditional banks to get loans for college, they set the repayment terms, often with a hefty interest rate of 6% or more and stringent repayment terms, even if your child does not secure a well-paying job directly after graduation. When you invest in a whole life insurance policy, you become your own bank, which means you set your own repayment terms, including the interest rate and the timeframe for repaying the loan (Hint: You actually don’t ever have to pay back what you borrow – it’s up to you!).
- Your kids can count on a steady cash flow: As your policy’s cash value grows over time, you can keep accessing your increasing cash value to pay for all four (or five or six) years of your children’s college education. A whole life insurance policy provides a steady, secure cash flow that gives you financial peace of mind, ensuring your kids do not need to take out costly traditional loans.
You absolutely don’t need to worry about going bankrupt just to fund your kids’ college education. The keys are to become your own bank with a whole life insurance policy and then to borrow against the policy’s cash value with repayment terms you set for yourself (or for your child). Your children can then count on a steady cash flow to pay for the most important, formative years of their adult lives.
For more information about a better way to pay for your children’s college, visit Paradigm Life’s article, How to Safely Fund Your Kids’ College or take part in our financial course below.