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Parental Loans for Learning

Whole Life Insurance/Universal Life Insurance

Unlike term life insurance, which pays your beneficiaries only when you die, the value of a whole life policy can be accessed during your lifetime by taking a loan secured by the cash surrender value of the policy. These loans usually have a relatively low interest rate.

This type of policy uses one portion of your annual premium for life insurance and invests the other portion in an account where the interest compounds on a tax-deferred basis. When your child is ready to start college, this could be a good source of funds.

IMPORTANT NOTE: If you don't pay the money back, or you die with the loan still due, the amount of the loan will reduce the death benefit.

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