Creating a Child Life Insurance Education Plan

April 20, 2023

A child life insurance education plan can help secure their future and give them a leg up early in life. Every parent wants to see their child succeed, and helping them fund their college degree is a great way to do so. Of course, most families need cash reserves to do this, and student loans are often an unappealing option. The right life insurance policy can offer an alternative path toward funding your child's education.

More to Know About Child Life Insurance

Learn more about the best child life insurance plans and how you can leverage your policy's cash value.

Find the Right Life Insurance

What is a life insurance child education plan? A child education plan is a strategy that policyholders can use to draw from their policy's cash value to fund their child's education. This strategy is advantageous because a policy's cash value will increase as it ages, making it an effective tool for accumulating college savings. To use this method, though, you must choose a policy offering cash value. Whole life and universal policies are popular options for this reason.

Make Regular Premium Payments

Once you've chosen the right life insurance policy, you can contribute to its cash value by making regular premium payments. If you opt for a whole life policy, this value may accumulate as soon as you make payments. Sometimes, value only accrues once you've held the policy for at least two to five years. If you're concerned about your savings timeline, you should reach out to your life insurance agent to see how long it will take to reach your savings goal.

Learn How To Access the Policy's Cash Value

Your life insurance's cash value will only be accessible while you are alive. When it comes time to use the cash value to pay for your child's college, you can do this in a few ways. First, you can request a loan against the value of the policy. When you do this, you will later repay it in full. Alternatively, you may simply withdraw from the policy's cash value. It means that you won't have to repay it, but it will reduce the sum of the policy's death benefit.

Consider Any Fees That May Be Applicable

It's important to note that drawing on a policy's cash value may incur fees. It is especially true if you opt to take out a loan to access its value. Rates can vary widely between policies. Suppose you are investing in a life insurance plan and intend to use it for college savings. In that case, you should read the policy's terms and estimate the applicable fees before you commit to paying the monthly premiums.

Discover the Possibilities of Life Insurance

Life insurance is an incredibly versatile investment. In addition to the protection it can afford your family if you pass away, it's an effective way to help you save for your child's education. Establishing a life insurance child education plan can set your kid up for the future they deserve.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.