It’s that time of year when that dreaded condition takes hold. Its grip is relentless and spreads faster than a measles outbreak at a theme park–it is “Senioritis.”
Your high school senior has seen the light at the end of the tunnel; and like a moth to a flame they are inexplicably drawn to it. College letters are rolling in, financial aid packages are coming–or not–and as a parent, only you fully understand the financial magnitude of financing a college education. The average student loan debt for the graduating class of 2014 is $33,000 with over 70% of all graduates walking across the stage in debt from student loans. Source
While your high school senior may be planning for Senior year Spring Break, you can help them plan for their financial future by purchasing a permanent life insurance policy for them. A college education gives your kiddo a leg up in the job market while a permanent life insurance policy gives your kiddo a leg up in life. A modern life insurance policy is a multi-tasking no brainer – think smart phone. Yeah, it’s a phone but so much more.
The death benefit offers coverage for what no parent wants to think about but many have to deal with–just like using that smart phone to actually make a call. We know it dials but how often do you use the phone?
A permanent life insurance policy purchased now locks in your young adult’s insurability while they are in good health, before any “I only did it once!” behaviors take hold, before the “Freshman 15,” before… well, you know where this goes. Most permanent life insurance policies offer riders1 that allow the insured to increase their coverage at certain ages without going through underwriting.
Permanent life insurance grows cash value. If the policy has enough cash value accumulated, it can be accessed through tax-free policy loans or withdrawals, and used to pay down student debt, for a down payment on a home or to supplement retirement. 2 And don’t forget about the living benefits either. Many policies offer living benefits in the form of optional accelerated benefit riders, that provide access to the death benefit in the event of a qualifying terminal, chronic or critical illness.3 Your young adult can stay on your health insurance until they are 26 which is great! They have time to lock down that first job and get started earning. Chances are if something were to happen, they won’t have the financial resources to get them through an extended period of time without working.
College is exciting – a time of hope and possibility. Help your kiddo keep those possibilities alive and while you are completing FAFSA forms and college applications, submit an application for a permanent life insurance policy as well. Then and only then – plan your own celebration. You’ve earned it!
1Riders are supplemental benefits that can be added to a life insurance policy and are not suitable unless you also have a need for life insurance. Riders are optional, may be available at additional cost, and may not be available in all states or on all products.
2Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrwawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender. Surrender charges may reduce the policy’s cash value in early years.
3Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you.