Indexed Universal Life (IUL) insurance policies can be used to fund college, offering potential tax-free access to funds and a death benefit. Unlike traditional college savings plans like 529s, IULs don't have restrictions on how the accumulated cash value can be used, making them flexible for various educational expenses.
Advantages of using IUL for college funding:
- Tax-free growth and access:
IUL policies offer the potential for tax-deferred growth, and funds can be accessed through policy loans or withdrawals without triggering taxes.
- Flexibility:
Unlike 529s, IULs don't restrict funds to qualified education expenses, allowing for use on various college-related costs, including travel and living expenses.
- Death benefit:
IUL provides a death benefit, offering financial protection to the family and ensuring the college savings goal is met.
- No eligibility requirements:
IULs don't have the income or eligibility requirements that 529s have, making them accessible to a wider range of families.
- No penalty for non-educational use:
If a child doesn't attend college, the funds can be used for other purposes without triggering penalties.
