College is expensive. It costs tens of thousands of dollars each year to attend a four-year college or university. And the costs continue to rise. Clients could incorporate a fixed index universal life (FIUL) policy into their college financing strategy to help pay for the cost of higher education.
While many people buy life insurance to provide their loved ones with a death benefit that is generally paid income-tax-free to beneficiaries, there are other ways the policies can be useful to clients. With the accumulation potential of FIUL insurance, the policy’s accumulation value has the potential to build over time. The cash value of the policy can be accessed through policy loans or withdrawals,1 which can be used to help pay for college tuition.
The 2022 Allianz Middle Market Study* found that many people in the middle market are worried about inaccessible savings. But those who already own a cash value life insurance policy were less likely to worry.
The 2022 Allianz Middle Market Study focused on people ages 25 to 45 who are contributing to their 401(k) plan to the full company match and have additional funds that could be put into another financial vehicle.
For example, while 41% of respondents without life insurance worry about having too much of their savings inaccessible for use in emergencies, just 33% of those with life insurance said the same. And, 50% of respondents without life insurance worry about finding financial products that provide access to funds, while allowing money to accumulate. Fewer Americans with life insurance (41%) said the same.
Using an FIUL policy to help pay for college has unique benefits compared to other funding sources for the middle market.