Permanent life insurance is protection that can be kept in force for as long as you live. No other financial services product can do what life insurance can in this way—create principal quickly in the event of death and be a source of money to borrow during life. This makes having a permanent life insurance policy an important consideration as part of an education funding strategy.

This means:

• There's the assurance that the people you care about will be taken care of financially if you die unexpectedly.

• There's the financial resource that you or your heirs can tap to fund an education.

You can draw on the cash value of your life insurance policy through policy loans. The advantage here is that, currently, the growing cash value in a life insurance policy is not counted as an asset when applying for financial aid.

Also, it is the only funding option that provides benefits in the event of the insured's death. Withdrawing a policy's cash value, however, could have unintended consequences.*

If you live, your policy will continually accumulate significant cash value, which grows tax-deferred. When your child is ready to attend college, the funds will be available for you to use. In the event you die, generally the beneficiary receives the policy proceeds—tax-free—and this money can be used to fund an education.

Borrowing from your policy's cash value for education funding purposes has some important advantages over other education funding methods.

Some education funding tools dictate how and when your accumulated funds must be used to avoid penalties and tax. Life insurance does not. If you decide not to use your life insurance cash value for education funding purposes, it continues to grow—tax deferred.

If you plan to supplement your existing financial resources with financial aid or loans, permanent life insurance will not be taken into consideration for purposes of determining your child's eligibility for financial aid.