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A great way to use estate planning is to put away something for the grandkids. You can really help them if you prepare for a way to pay for their college tuition and living expenses, while they go to school by using life insurance as part of your estate planning.
How to Use Life Insurance for a Dedicated Purpose
To use life insurance to meet a certain financial need, you will have to work with your agent at Hanneken Insurance Agency Inc. serving Little Falls, MN and the surrounding area and a trust attorney. The way this works is you put the life insurance in a trust that directs the use of the death benefits for a certain purpose. Be sure to consult with a tax accountant as well to make sure you minimize the tax implications as part of your estate planning.
How much life insurance do you need?
Forbes reports that the cost of attending college increased eight times faster than wages over the past thirty years so it is getting really expensive now to attend college in America. The median cost of attending a four-year college in 2019 dollars is $104,480. This amount goes up each year. If it continues to rise at the same past rate, it will increase by about 2.6% per year.
To make the calculation, take the 2019 base number of $104,480 and then use a compound interest calculator found online to see what that amount will be needed in the future year that your grandchild will be old enough to attend college.
For example, if they are 5 years old now, then, 13 years later they will need about $145,864 so getting a policy with a death benefit of $150,000 would be nice.
Summary
Leaving your legacy as free college tuition or a windfall when your grandkids turn 18 is an excellent idea. You will free them from the burden of having to pay back this enormous debt if they have to borrow this money to go to college. Contact your agent at Hanneken Insurance Agency Inc. in Little Falls, MN to get a quote for the life insurance you need.