Yes, Life Insurance can be used to Pay for College if....
You have enough cash value in the policy to withdrawal or take a loan,
If you have a return of premium term policy which allows loans to be taken,
You received the death benefit which you were the beneficiary.
Remember, life insurance can be an asset for you to use provided there is enough resources for you to pull on. Good Luck.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The key component of college funding is the FAFSA (Free Application for Federal Student Aid.) Every college bound student and returning student must complete this form each year to receive any assistance. Every source of income used to pay college expenses must be included. Whether you cash in a life policy or take a loan the effect is the same, it drives up the family’s expected contribution amount and thus reduces access to financial aid.
Accumulating money for college in a life insurance policy is a great idea but get advice before you start withdrawing the money. It is probably better to use the money to pay off loans in the final year and beyond because it would not be included in any eligibility computation.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Can life insurance be used to pay for college costs? Yes, absolutely. Cash values in a life policy are unrestricted funds. You can use them for any purpose. College costs would be one of those. One nice thing about cash value life insurance is that those values are not required to be declared on the college FASFA report. The FASFA is something most all colleges and universities require families to do in order to figure out financial aid opportunities. Most all other assets parents have count against aid opportunities, but cash values aren't asked for.
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You have enough cash value in the policy to withdrawal or take a loan,
If you have a return of premium term policy which allows loans to be taken,
You received the death benefit which you were the beneficiary.
Remember, life insurance can be an asset for you to use provided there is enough resources for you to pull on. Good Luck.
Accumulating money for college in a life insurance policy is a great idea but get advice before you start withdrawing the money. It is probably better to use the money to pay off loans in the final year and beyond because it would not be included in any eligibility computation.