Reverse College Funding
As a business owner you have a lot of responsibilities at work and at home. Sometimes those priorities conflict and require tough decisions on how to use the money you earn from your business. Most business owners feel that the best use of their money is to put it back into their business, since that gives them the best return. While for many business owners that is true, that can leave other important priorities like college funding unmet.
Even if you haven’t saved anything for college, and have a child just about to start classes, it may not be too late. Of course, there isn’t time for regular college saving, but maybe there’s a way that those who haven’t prepared can fund college in reverse.
What does it mean to fund college in reverse? It means using a vehicle such as a cash value life insurance policy to build cash to help pay off the college loans. Life insurance is typically used as a death benefit when the insured has died. A lump-sum is paid to the beneficiaries of the policy.
Here’s how it works: Let’s say your daughter has been accepted to a school with tuition of $30,000 per year and you haven’t saved anything for her college. If the school called you and said, “Hey, we decided we were charging too much and so we decided to lower our tuition to $500 a month or $6000 per year. Can you afford that?” You jump up and say, “Yes!” Here’s the rub: the school is not going to call you and lower their tuition bill. But, if you take that $500 a month and buy a cash value life insurance policy on your daughter as she takes out student loans, that policy could build cash sufficient to help pay off her student loans 15 or so years down the road.
So even if you didn’t save in advance and your children are starting college, you may be able to take out the student loans and work towards paying them off.
Insurance products and services are offered by Mutual of Omaha Insurance Company or one of its affiliates. Home Office: 3300 Mutual of Omaha Plaza, Omaha, NE 68175. Mutual of Omaha Insurance Company is licensed nationwide. United of Omaha Life Insurance Company is licensed nationwide, except New York. United World Life Insurance Company is licensed nationwide except Connecticut, New York and the Virgin Islands. Companion Life Insurance Company, Hauppauge, NY 11788-2934, is licensed in New York. Omaha Insurance Company is licensed in all states except: AL, CA, CO, ID, IL, LA, NV, NH, NY, NC, PR, RI, VT, VI, and WI. Products not available in all states. Each underwriting company is solely responsible for its own contractual and financial obligations.
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