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College and Adult Planning – Uncommon Banking for Kids

We are producing several articles right now that have to do with helping you and your kids save for their potential college education or for wherever life takes them after high school. One of the unique ways we have to do this is through a tool we refer to as Uncommon Banking.

If you follow us, you know that one of our key concepts is Uncommon Banking, a way to leverage the cash value and other benefits of a whole life insurance policy. That policy can help with so many things, among them helping those kids thrive into adulthood. Uncommon Banking for kids is about four key principles. Let’s walk through them.

  1. Locking in Insurability – You can use the cash value of your own whole life policy for any need that you see fit, including your child’s education. But as a savings vehicle, you might consider having your children hold policies in their names. They need to qualify for a whole life policy, so the first principle is locking in insurability at a young age. When your child is healthy, that is the time to lock in their future insurability. For instance, child diabetes can develop between ages 3-10 and has a big impact on future insurability. People can, of course, live long, happy, productive lives with diabetes, but the cost of insurability will increase once diagnosed. This is a key principle for policy-holders of any age. So whether the policy is yours or your child’s, locking in insurability is crucial.
  2. Savings – Savings is different than investing. The whole life policy is designed to build cash value systematically and is not tied to the stock market. It provides liquidity for so many potential firsts: the first car purchase, funding a business or college, funding a wedding or a first house. Few other types of accounts are designed to handle as many life events as cash-value life insurance is.
  3. Growth – When you start a whole life policy, look for the tailwinds. Here’s what we mean: the policy will be growing by close to 5 times the premium between 25-35 years old. Imagine funding an asset that if you put in $1,500, could grow by nearly $10,000 and is liquid and non-taxable. That’s the growth potential in Uncommon Banking.
  4. Terminal Illness – The fourth principle is not something anyone likes to think about, but we think this is super important, especially for those of us who are self-employed. Imagine if you or your child is diagnosed with a terminal illness. One of our cousins was diagnosed with leukemia at a young age, and while she survived, it was far from certain at the time that she would. With a whole life policy, you can take half the death benefit tax-free to use for any care you deem necessary to fight and treat the diagnosis and or supplement your income for bills and cash-flow.

Uncommon Banking can benefit your children in so many ways. It is one tool among many that can provide financial stability for you and your kids as they grow and decide how to begin charting the course of their adult lives.