Including college funding in a life insurance policy is a strategy that allows parents or grandparents to plan for their children or grandchildren’s education expenses while also providing life insurance coverage. This can be done by purchasing a permanent life insurance policy, such as a whole life or universal life policy, and designating the children or grandchildren as beneficiaries of the policy’s death benefit.

As the policyholder pays premiums, the cash value component of the policy accumulates, providing a source of funds for the beneficiaries to use towards their education expenses. This can be accessed by taking out a loan against the cash value or by surrendering the policy, depending on the policy’s terms and conditions.

This strategy can be more flexible than a 529 plan, which is a type of college savings plan, because the funds in a 529 plan can only be used for qualified education expenses. With a life insurance policy, the beneficiaries can use the death benefit or cash value for any purpose, including education expenses, if they choose to do so.

Additionally, a life insurance policy can provide a death benefit that can help to provide financial security for the beneficiaries in case of the unexpected death of the policyholder. This can be particularly beneficial for parents or grandparents who want to ensure that their children or grandchildren will have financial support in case something happens to them.

It’s important to keep in mind that using life insurance for college funding is a long-term strategy, and it’s important to work with a financial advisor to evaluate if it’s the right fit for your overall financial plan and to understand the potential tax implications. It’s also important to consider the overall financial need and risk management plan before taking any decision.