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College Planning with Life Insurance

What is your strategy to help cover your children’s college education?

The situation

For families with college age students, 85% relied on parents' income and savings to help pay for college. These families picked up 45% of the college bill.


Nearly 58% of these families had created a plan to help cover a portion of the college costs.1


How many of your clients have a savings plan in place to cover the cost of their children’s education?


The strategy


College Planning with Life Insurance shouldn't replace other savings vehicles within your client's strategy. Rather, life insurance may provide the boost these other plans need due to:

  • Plan limitations

  • Restrictions on fund usage

  • Tax benefits, and

  •  An abrupt end tot he funding plans due to the loss of income from an unexpected death.


The advantages

  •  Build-in protection with a generally tax-free death benefit to support a client's family members after death2

  •  Opportunity for tax-deferred cash value accumulation and tax- advantaged distributions3

  • Currently no requirement to report insurance or cash value on the Free Application for Federal Student Aid (FAFSA)

  • Complete control of the insurance coverage

  • Control of funds (if the child receives a full scholarship or decides not

    to attend college, the cash value may be used for other purposes)

  • Diversification

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1 Source:


2  Foresters, their employees and life insurance representatives, do not provide, on Foresters behalf, legal or tax advice. The information given here is merely a summary of our

understanding of current laws and regulations. Advise your clients and prospective purchasers to consult their tax or legal advisor.


3  Access to tax-advantaged loans assumes the policy stays inforce until death. If the certificate lapses, there may be tax consequences on any cash value above the cost basis. A life insurance contract can become a Modified Endowment Contract (MEC) when premiums paid exceed certain limits as outlined in the tax code. Withdrawals or loans will reduce the death benefit and cash values and may affect how long the insurance contract is in effect. Dividends are not guaranteed. Past dividends are not an indicator of future dividend performance.

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