William Penn Life, 2018 (53. évfolyam, 1-12. szám)
2018-01-01 / 1. szám
Moneywise Tuition Growth at National Universities Average tuition and fees at ranked schools between 1997 and 2017 (Not including costs for room & board) $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Academic Year Private I Public Out-of-State 1 Public In-State Source: U.S.News & World Report ciary decides not to attend college or does not use all the funds. • 529 funds can be used at most colleges and universities in the U.S. • Some states allow a deduction on your state tax return for contributions to a 529 plan. However, there are some drawbacks to 529 plans: • Plans vary from state to state. • Investment options, sales charges and account fees could apply. • If money withdrawn from the 529 is not spent on "qualified" higher education expenses, the distribution could be subject to income taxes and a 10% penalty tax. Anyone that has put a child through college realizes that there are more expenses associated with college than tuition, room, board and books. • Having funds in a 529 plan can reduce your student's ability to receive income-based financial aid. Funds invested in 529 plans are considered parental assets on the FAFSA application. A significant portion of the plan's assets count as "expected family contribution" for the FAFSA calculation. If you have put all of your college funds into the 529 plan, the net result could be that your child will not be eligible for other types of financial aid. • 529 plans have contribution caps. Exceeding them can subject the contributor to the gift tax. With other options becoming more readily available and viable, overall assets held in 529 plans have been steadily on the decline since 2011. People are beginning to realize that there are better options for college savings, especially whole life insurance. So, let's review the whole life insurance option. There are many pros to using whole life insurance for college savings: •Whole life plans have very attractive interest rates, dividend options and no downside risk. They can't lose money due to market downturns. I recently read an article about a New York stockbroker who had all of his children's college funds invested in the market in 2008. Remember what happened in 2008? Yep, a "market correction"—or "crash"—as some may call it. Following this crash, he stopped contributing to the 529 plans and purchased whole life insurance as his college savings vehicle. His reason-no surprise here-was safety. • Cash value and dividend accumulations in a whole life certificate won't jeopardize your student's chances of getting financial aid. Life insurance values are not currently disclosed on the FAFSA form. • Whole life insurance allows you to save for any person. • Funds not withdrawn will not be subject to penalties. This allows for much greater flexibility. • Whole life insurance offers unlimited ways to spend the money without restrictions on using only for "qualified" expenses. Will your son or daughter need a car for college? You can use the funds from the whole life insurance, but definitely not funds from the 529 plan. • While 529 plans have contribution caps, whole life insurance has no contribution cap. Unlike the 529, you can contribute a large, one-time payment without being subject to the gift tax rules. • The whole life option is "self-completing" should the insured die or become disabled before your child begins college. If the unfortunate should occur, the death benefits of the whole life certificate can be used to fund the college education. And, if the primary insured should become disabled, and the certificate includes a premium waiver, the certificate would continue to grow and provide the needed funds for college costs. To sum up, for those that qualify, whole life insurance is hands-down the better option for college savings. More and more people are catching onto this concept, but it's still a little known secret in the college funding arena. Perhaps it's because people are just turned off when they hear the words "life insurance," or maybe they just never heard of all the great things that whole life insurance can do for you. More and more people are beginning to realize that it can do so much more than just provide a death benefit, such as helping you pay for things in your everyday life like college funding and retirement. It's time to start spreading the word of all of the benefits that whole life insurance can do for you. Are you a young parent (or grandparent) looking for a better way to save for your loved ones' future college expenses? Give your William Penn Association agent a call today! They'd be happy to sit down and help you put a plan in place to help you reach all of your financial goals. Don't have an agent? Call the Home Office, and we'd be happy to help or assign you a local agent. From the sales team at the WPA Home Office, we wish all of our members, agents, brokers and managers a safe, happy and prosperous new year! □ WILLIAM PENN LIFE 0 January 2018 0 5
