College Costs are Rising
    While most people understand that the cost of a college education has been steadily rising, few realize the magnitude of the
    increase. According to the FinAid Page (, a good rule of thumb is to expect college costs to increase at about
    twice the rate of inflation. For example, average total charges (tuition, fees, room and board) rose 5.9% for the 2009-10
    school year1 while the inflation rate for the year 2009 was 2.7%.2

    College costs didn’t just recently begin to rise. It’s been an exponential increase over the past 30 years. The chart below
    shows the average annual published college cost (tuition, fees, room and board) for a public four-year institution in 2009
    dollars. In other words, this chart shows the annual cost of college with the effects of inflation removed.

    A Solution from an Unexpected Source
    Using your personal savings should be the primary source for college funding. However, there is one “flaw,” with personal
    savings. If the family’s primary breadwinner passes unexpectedly, personal savings plans generally come to an abrupt end. A
    life insurance policy can ensure the full funding amount is immediately available to pay for college.

    But you don’t have to die for this plan to work. The right life insurance policy can actually help pay for college costs. A policy
    that accumulates cash value, such as an Indexed Universal Life policy can provide a way to help pay for college costs. Some
    of the advantages of a permanent life insurance policy include:

    Parental Stewardship — The policyowner has control of the money in the policy. Should plans change, the money can be
    used for any other purpose without tax consequences.3
    Tax-Deferred Growth — Cash value growth inside the policy is tax-deferred.
    Policy Loan Options — Policy loans are generally free from income tax.

    An Indexed Universal Life Insurance provides death benefit protection and a shield from negative returns. With the opportunity
    to earn interest based on the upward movement of a stock index, an IUL offers upside potential with downside protection
    – a “shield” from negative returns. The secret to the shield is the Index Account:
    • It’s linked to a stock index such as the S&P 500.
    • The change in index value is locked in annually.4
    • Zero percent floor – the Index Account can’t drop below its annual starting point!
    • Minimum Account Value – Every eight years, we’ll make sure that the account value has earned at least a 3% average
    per year calculated from policy issue.

    Here are the key points to remember about funding a college education with an IUL.
    1. College costs are increasing at roughly double the rate of inflation, and have done so for the past 30 years.
    2. Life insurance helps ensure that a college savings plan is completed if the primary breadwinner dies prematurely.
    3. Cash value growth is tax deferred and policy loans are generally income tax free.
    4. The Indexed Account is linked to the growth of a stock index, but provides the safety net of a zero percent floor, all the while locking in any returns
    on an annual basis.

    Next Steps
    College costs are increasing at a rate faster than inflation. The amount you are saving may not be enough.
    • If you haven’t started saving, there’s no time like the present!
    • Make sure the goal will be met. Talk to your agent about an IUL for your child's college planning.
College Planning
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