529
Replacement

Discover an incredibly versatile alternative to traditional 529 plans for college savings, offering far more financial freedom. By funding a properly structured Indexed Universal Life (IUL) insurance policy, your contributions grow tax-deferred within the policy’s cash value, just like a 529 plan. When it's time for college expenses, you can access the cash value through tax-free policy loans. Crucially, the IUL's cash value is generally not counted as an asset in federal financial aid calculations (FAFSA), unlike a 529 plan, which could significantly preserve your child's eligibility for need-based scholarships and grants.

 

The ultimate advantage of using an IUL lies in its remarkable flexibility, eliminating the single greatest limitation of a 529 plan: restrictions on fund usage. If your child earns a scholarship, chooses a trade school, or decides to skip college altogether, a 529 plan would subject the earnings portion of a non-qualified withdrawal to income tax and a stiff 10% penalty. With an IUL, however, the cash value can be borrowed or withdrawn for any purpose, a wedding, a business startup, a home down payment, or to supplement your retirement income, all without the threat of a penalty or a surprise tax bill on the withdrawal/loan amount (up to the cost basis).

 

This multi-purpose financial tool ensures that your savings remain entirely under your control, regardless of how your child's future unfolds. Beyond college funding flexibility, the IUL policy is permanent life insurance, providing a tax-free death benefit that guarantees funds will be available for your child's education or financial security, even if you are no longer there to provide for them. The combination of tax-advantaged growth, downside market protection, freedom from fund restrictions, and built-in financial protection positions the IUL as a superior, all-encompassing strategy for long-term wealth accumulation that extends far beyond a singular education goal.