Parents often have the cost of higher education on their minds. The rising college bills, cost of dormitory accommodation, books, and travel can be overwhelming for any parent. After all, it is a significant investment.
The average annual cost ranges from $22,180 for four-year in-state students to $50,770 for the students of private colleges. If you have a college-aged child, it is important that you know about often underused ways to pay for tuition, like life insurance policies.
Naturally, the primary goal of a life insurance policy is to deliver a death benefit. But cash value life insurance policies also include an investment element, which allows earning interest. It is a handy feature, especially when parents need to withdraw or borrow money to pay for a child’s education. However, it is not a one-size-fits-all approach.
Taking out a life insurance policy with cash value makes more sense for parents planning far ahead. For instance, if your child is 2 or 3 years old, you have enough time to maximize cash value. But bear in mind that apart from gaining interest, you also need to pay premiums and a commission fee if you are working with an agent.
It is no secret that many college students take out student loans to finance their tuition fees and living expenses to some extent. They often have two options: federal and private loans. And while federal loans do not require a co-signer or complete financial settlement in the event of the borrower’s death, private loans have more stringent rules. That is why it can be a wise choice for a student to take out a life insurance policy. After all, it can help repay the private loan and protect the parent (co-signer) financially.