Permanent Life Insurance as Part of a College Savings Plan

Of all the solutions that are discussed for funding a college education, none is less glamorous than permanent life insurance. And none of them is more necessary.

All of the other solutions fail if you die or become disabled and can’t continue to make annual contributions. Under this scenario, only life insurance succeeds.

Permanent life insurance offers several advantages as part of a college savings plan.

Permanent life insurance provides benefits in the event of the insured’s death – meaning that if something happens to you or your partner, your child can still attend college.
Your permanent life insurance policy will accumulate cash value on a tax-deferred basis.
The cash value of a permanent life insurance policy can be used for any purpose. Depending on the type of policy and how it is structured, you may be able to access this cash value (through partial surrenders and/or policy loans) to help pay tuition and living expenses.
Permanent life insurance is one of the few assets that will not be taken into consideration for the purposes of determining your child’s eligibility for financial aid.

Some education funding tools dictate how and when the money you have saved must be used to avoid penalties and taxes. Permanent life insurance doesn’t. If you decide not to use your life insurance to help with a college savings plan, it just keeps on growing – tax-deferred.

Planning for your financial security means more than just creating a college savings plan. To be certain funding will be available when needed, consider other potential life events that could affect your goals:

Unexpected death of you or your partner
A disability or illness that could prevent your or your partner from working
Your own retirement savings goals

Unless you plan for these possibilities with adequate life insurance, disability insurance and other financial products, you or your family could be forced to tap into savings to cover other expenses.

Depending on the products and/or services being recommended or considered, refer to the appropriate disclosure brochure for important information on the Northwestern Mutual Wealth Management Company, its services, fees and conflicts of interest before investing or engaging in financial planning services. To obtain a copy of one or more of these brochures, contact your representative.

Estate Strategies Group (ESG) is a division of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (WMC). Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and its subsidiaries and affiliates.

Michael J Mullarney is a Representative of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (WMC), a wholly-owned company of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and limited purpose federal savings bank. All financial planning, investment management and trust services are offered only through WMC by properly credentialed Representatives who operate from agency offices of WMC. WMC is not a broker-dealer or insurance company and does not offer insurance products or brokerage services. Representative is an Insurance Agent of NM (life insurance, annuities and disability income insurance) and Northwestern Long Term Care Insurance Company, Milwaukee, WI, a subsidiary of NM (long-term care insurance), and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), 875 3rd Ave Fl 23, New York, NY 10022-7250, 212-867-8989, a wholly-owned company of NM, registered investment adviser, broker-dealer and member FINRA (www.finra.org) and SIPC (www.sipc.org). Representative may also be an Investment Adviser Representative of NMIS. All brokerage services are offered only by NMIS. NM and The Russo Financial Group are not broker-dealers, registered investment advisers or federal savings banks. There may be instances when this agent represents insurance companies in addition to NM or its affiliates.

Investment products are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, NMWMC or its affiliates and are subject to investment risks, including possible loss of the principal amount invested.

The products and services referenced are offered and sold only by appropriately appointed and licensed entities and Network Representatives. Network Representatives and their staff might not represent all entities shown or provide all the services discussed on this Web site. Not all products and services are available in all states.

Michael J Mullarney is primarily licensed in New York and may be licensed in other states.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP, Certified Financial Planner and CFP (with flame logo)®, which it awards to individuals who successfully complete initial and ongoing certification requirements.