FFM - College Funding Using Variable Universal Life

“One of the most interesting uses of Variable Universal Life lies in the area of College Planning. Think about it, the potential for tax free tuition dollars, self completion in case of premature death, no offset against financial aid eligibility, and Junior can't take the money and run at 18.”

Mark R. Fielder
President, FFM, LTD.

Variable Universal Life (VUL) has plenty of applications for the modern investor and one of the more interesting uses is as a College Planning Tool.

Variable Life plans combines tax advantages with flexibility in deposits and the opportunity to earn higher potential returns than fixed income alternatives that many parents and grandparents rely on. Best of all there are no Congressionally imposed limits on how much you can invest, providing suitability requirements are met.

If the policy is properly established and maintained as a non-modified endowment under IRC section 7702, the policy's cash value build up (by virtue of the underlying sub-accounts) can be accessed through loans and withdrawals 100% income tax free based on current tax laws. Hence, this could potentially serve as a source of tax free dollars, which in turn, could be utilized for paying tuition expenses, should the investor so elect.

If you have ten (10) years or so before Junior heads off to college, a VUL can help offset the higher costs of higher education and, best of all, distributions will not increase your personal marginal tax bracket!

What others are Saying

Saving For College The Smart Way. "Variable life can make more sense than a large (taxable) custodial account. You'll save taxes-and, as the owner of the policy, you'll retain control of the money indefinitely. Furthermore, colleges don't look at the cash value of a parents life insurance when determining the child's eligibility for aid."

"Clients who repeat the old saw 'buy term and invest the difference', as well as scores of other including business owners and couples saving for their children's educations are prime candidates for variable universal life policies."

Action To Take

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Securities are offered through Girard Securities, Inc. member FINRA, SIPC.
Mark R. Fielder, Registered Principal. CA. Insurance Lic. # 0690576

Disclosure: For more complete information about variable life, including charges and expenses, obtain a prospectus by calling 1-800-480-7526. Read it carefully before you invest or send money. Investment return and principal value of an investment will fluctuate. An investor's units, when redeemed, may be worth more or less than their original investment. Consult your tax advisor. Loans and withdrawals, in most cases, will reduce the cash values and death benefits associated with the contract you own. As a result, you should carefully examine the impact of such activities prior to implementing. Read the prospectus carefully as it will accurately describe the impact of loans and withdrawals for the product or program in question.