Setting Up A Legacy Plan For Your Children, College Funding and Retirement

Maybe you've recently had a child (or three), or you and your family had some little ones several years ago, but just haven't gotten around to doing any sort of financial planning for their futures quite yet. Many people don't even know where to begin besides talking to their parents or their bank about setting up a separate account, but then when an unexpected expense comes around, as they always do, it wipes out the savings that were set aside.

There are many plans and strategies being offered and pumped up by the government for college planning such as 529 Plans and you may have even seen the Gerber Life plan commercials. These strategies can and will work, but in my opinion there are much better and efficient ways of accomplishing your goals, as well as the little one's.

A strategy that I have used for clients in the past has been setting up a child legacy plan. Once you have an analysis performed, you will review the numbers,  and you'll see why. You see the Gerber ads on tv for a Gerber Life policy to plan for college, so it isn't anything out of the ordinary or reinventing the wheel, but our advanced strategy has taken that to another level.

As you've probably may have heard, forget everything you know about life insurance for a few moments. We can set up a certain indexed universal life insurance (IUL) policy on a child that is indexed (linked) to a market index (S&P 500) that will go up with the market performance, but will not go down when the market does. Most of these plans have a strategy of a 0% floor (you will never lose) and a cap of currently around 9.5% (if the market out performs 9.5%, you cap out). One of the kickers to this is that the interest that is credited each year is locked in annually and can never go below that.

Another benefit to this strategy is that you will set up the policy with the least amount of death benefit with the most amount of cash accumulation, which will then be accessible TAX-FREE in college years. The premiums that you will pay can be completely flexible. Some people pick a specific amount as $100 per month every year or maybe on a gradual scale, $75 per month for 5 years, $100 per month for 5 years, $150 per month for 5 years. You can decide when to transfer the policy to the child, but most wait until after the college funding is completed or later for fiscal responsibility reasons.

Not only does this plan provide for tax-free college funding, it does not interfere with qualifying for financial aid, as every other plan does, including the much hyped 529 Plans (which also MUST be used on higher education purposes).

These plans also can be set up to carry on with the child for the REST OF THEIR LIVES! We set them up to be able to provide for a down payment on their first home or second home, purchasing cars throughout the years and even setting up and planning for a TAX-FREE RETIREMENT vehicle. This sounds crazy, but it is easily attainable.

This is the magic of COMPOUND INTEREST, which has been referred to as the 8th Wonder of the World. Most people understand that the earlier you start saving for retirement, you have an exponentially better chance of a larger nest egg for income in retirement. Now consider if you had another 25 years of savings and compounding BEFORE that. The numbers can be shocking.

Once you see and understand the power of one of these advanced strategies, you will know there is nothing else out there that can set your children up for financial success anywhere close to this. It can also be a great financial education tool for them as they grow up and develop into adulthood when the ownership is transferred over to them.

Speak with a financial professional who specializes in IULs to get your complimentary review.