Using Term Life Insurance To Ensure College Is Covered
With all the popularity of 529 Plans and other methods of saving for your children's educational future, one great way of ensuring that all of college is paid for in the event of anything happening to you is often overlooked. That method is term life insurance. It's quick, easy and usually very inexpensive to take out a policy on yourself with a term length that ensures that your children will have all of their college expenses taken care of; including things 529 Plans just can't cover. Or even better, obtain both a 529 Plan and adequate term life insurance coverage.
What Is A 529 Plan?
A 529 college savings plan is an investment account that allows you to set aside money for your child's college education and let it grow tax-free. The federal government won't tax your money when you take it out of the account as long as it's used for higher education.
You can use the money in a 529 plan at any accredited college or university in the U.S. (public or private, graduate or undergraduate). The money can be used for tuition/fees, room/board, books, and supplies/equipment.
How Can Term Life Insurance Cover Educational Costs?
One of the many benefits of term life insurance is choice; you can choose the term length and coverage amount and tailor them to benefit you and your dependents. For example, many people may choose a 30-year term length to cover the mortgage on their home. Similarly, a 30-year term purchased soon after your child's birth can ensure that your children are covered through their college years in case anything happened to you. And a benefit of term life insurance over something like a 529 savings account is that your beneficiaries can choose how they want to spend the money (as opposed to a 529 which must only be spent on things education-related). This way, if anything were to happen to you, your child could cover both education and personal costs, or use the money for something else. Or, if you passed away before the child was an adult, the money could be used to help raise the child up to (and hopefully through, depending on your coverage amount) his or her college years.
Remember to adjust your coverage and beneficiary designations each time something major occurs in your life, such as the birth of a child.
Insure your children's future with term life insurance; find out how low your rates can be today!
InsWeb Life Insurance Learning Center: http://www.insweb.com/learningcenter/life-default.htm
SEC's Introduction to 529 Plans: http://www.sec.gov/investor/pubs/intro529.htm