College Q&A

Q: Why are alternatives to the 529 plan being explored as a college funding tool for investors?

A: College Planning

When planning for a child’s or loved one’s higher education needs, Indexed Universal Life can be a perfect solution.  College tuition costs are rising every year and most who attend college struggle to make ends meet.   Over the last decade many college saving plans that are market linked, or are exposed to market volatility have experienced poor or negative returns.  Now although these poor returns are not typical, we are in a global recession and volatility is expected for several years to come.   Moderate returns from a college savings plan is vital in order to insure that all the financial needs will be met when the time comes.  With an Indexed Universal Life policy you will ensure that your money will never go backwards, or lose a penny due to market volatility.  In fact, over the last decade many of these vehicles have achieved over a 7% average return.  As with most college savings plans you will have the option of withdrawing the funds tax free for all college expenses.  Furthermore, you ensure all of these benefits remain in place if your loved one decides a different alternative from college.   To learn more about these kinds of benefits please reference my article titled Indexed Universal Life:  Flexibility for all phases of life.

 

Q: What are the benefits of Indexed Universal Life compared to the 529 plan?

A: Flexibility above the 529 Plan 

Indexed Universal Life policies are being chosen by thousands of investors as an alternative to a 529 plan with respect to college planning.  Investors today are searching for financial vehicles that have the ability to bypass market volatility while still having the capability of withdrawing the funds tax free.  Over the last decade many 529 plans have basically broken even, or incurred a loss.  Another reason investors are looking for alternatives to the 529 plan is because you lose the ability to withdrawal the funds tax free if the chosen beneficiary fails to attend college.   Added to which if the funds are withdrawn within a 529 plan for a purpose outside of college expenses a 10% penalty will be enforced.   With Indexed Universal Life you can participate in tax free withdrawals outside of college funding without incurring a penalty.  Furthermore, there is no penalty for early withdrawal making the funds readily available if needed.  To learn more about how Indexed Universal Life can be a funding tool for college please feel free to contact us at About Universal Life .com.    

 

Q: How is Universal Life more flexible than the traditional 529 plan?

A: Different Funding Options 

Indexed Universal Life can be a perfect alternative to a 529 plan by avoiding market volatility and still being able to withdrawal the funds exempt from Federal Income tax.  Indexed Universal Life policies give you the flexibility in both funding and setting up the policy.  Unlike a 529 plan, Universal Life policies do not require you to name a beneficiary in order to withdrawal the funds tax free.  This gives the policy owner the flexibility and control of when and how the money is to be withdrawn.  If the child chooses to not go to college all of the tax free benefits stay in place.  In fact, there are many households where the child does not attend college and the policy owner will use the money for retirement planning instead.  To recap, Indexed Universal Life allows the policy owner to remain in control whether or not the child attends college.  Tax free withdrawals are not dependent on whether or not the child goes to college.  With having total flexibility and still being able to withdrawal the funds tax free, investors are now looking to Universal Life as a college planning tool with advantages above and beyond a 529 plan.  To learn more about how Indexed Universal Life can be a funding tool for college please feel free to contact us at About Universal Life .com.