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| Insuring Your Child’s College Education |
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...For many young people, their parents' contribution is usually the most significant element in paying college costs. Here are some tips on preparing for this major expenditure...
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Insuring Your Child’s College Education
Few would argue with the value of a college education. Our economy increasingly favors college graduates for the best jobs. Technological change at an accelerated pace is requiring a more knowledgeable and skilled workforce than ever before.
Meeting college costs is a major concern of most parents. Beginning to accumulate capital while children are still young generates funds over an extended period with less stress on family budget from year to year.
Some external resources are available to help. These include scholarships, grants, loans, and work-study programs.
For many young people, their parents' contribution is usually the most significant element in paying college costs. Here are some tips on preparing for this major expenditure.
Work methodically through a planning process that evaluates your financial situation in detail. What are the family’s assets, income, living expenses, debts, future needs, projections on future liabilities including college costs. How many children will need to go to college? How close are they in age?
Does the family have life insurance, to provide for income in the event of the death of a breadwinner?
Here are the key components of a thorough family financial analysis:
29198. Details of existing financial status
29199. All financial goals and objectives
29200. Summary of education funding goals– how much money will the family need and how soon.
29201. Data on number of children in the family, their ages, expected dates of college attendance, amount of resources now allocated for educational cost.
When completed, your plan should point to additional resources that parents will need to fund education costs.
Options include regular savings or purchase of stocks or other securities for long-term growth. A permanent life insurance policy may also supplement that plan. Life insurance provides tax-deferred growth of a cash value that can be drawn upon in the form of lower-cost loans*.
Life insurance also provides an immediate and income-tax-free benefit payable upon the death of the insured, helping to assure available funds for education costs in the event of the death of a family wage earner.
*Unpaid loans reduce the policy’s cash value and death benefit and may result in a tax liability.
Jamila Haseeb is with MassMutual’s FMC Financial Group in Newport Beach. You can reach Jamila via e-mail at fhaseeb@finsvcs.com or by calling (310) 413-9919.
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Posted on Aug 09, 2009 23:18pm by Jamila
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