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Life insurance can be key
Life insurance can be vital in helping fund your child's education – whether you're there or not.
Life insurance offers certain tax advantages. In the event of your death, your family can choose to use the income tax-free death benefit to pay education costs. And with some types of life insurance, you can take loans against your policy without tax penalties.2
Be sure to take into account these additional features that may be available with certain types of life insurance:
Guaranteed cash value, so you know a certain amount of money is available
Access to your money, so you can use it for tuition and other educational expenses
Market participation, so your policy’s value has the potential to grow based on the performance of investments in your policy
Considering term vs. permanent insurance
If you simply need to pay for your child's college expenses in the event of your unexpected death, consider term life insurance. Choose the length of time you need coverage and the amount of death benefit you need.
Talk with your financial advisor about how you may be able to use permanent life insurance to help with college expenses. You may be able to take withdrawals or loans against the policy's cash value, which can continue to grow tax-deferred. (This may be an option if you've maximized your 529 Plan college-saving plan, which also offers tax-deferred growth and tax-free withdrawals for higher education expenses.)