Should I use a life insurance endowment plan to pay for further education ?
In some countries parents are investing in endowment life insurance policies with a view of saving policy and obtaining a lump sum on maturity of the policy to pay for their children’s education. This is understandable when one considers the rising cost of education, even in the UK.
In the US, where college or university fees tend to be relatively on the high side compared to other countries, some parents take out a number of endowment life policies. The idea is to make an advance provision based the sum or sums insured so that by the time the kids are due to start University, the money is here to pay the fees.
Another way is for parents to take out a policy or sometimes a series of policies on their own name or life and then taking loans to cover the costs of the university fees. On maturity, the lumps sum is then used to pay off the loans. This is obviously useful if the time left to benefit from the endowment policies does not correspond to the time you absolutely need the money. Effectively, the loans are bridging loans until the life endowment policies come to maturity and pay the lump sum.
Many parents though are determined to send their children to university right from an early age. So, sometimes they plan the policy 20 years in advance, in fact right from the time the child is born so that by the time the latter is about 20 years old, the policy comes to maturity and the money is readily available to be spent on the child’s education. If it is an endowment policy with profit, there may even have a bit of money left for other things.
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