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How to use life insurance for your children's education

From preschool to college tuition

Two preteen brothers in casual clothes drawing and writing on white paper sheets while sitting at table in sunlit room at home.

As a parent, you already know how quickly your children’s education costs add up. It’s not just the tuition and fees. Education costs can include books and school-appropriate clothes (for little ones) and housing and other related expenses for college-bound kids.

But if something happens to you, and suddenly that income stream is gone, what would they do? Even if your kids plan to fund their own education, or you have a 529 plan dedicated to saving for college, the lack of parental financial support could significantly affect them.

Recent statistics show a shocking rise in college tuition and fees for public and private national universities over the past few years. Tuition and fees at private institutions have jumped 134%, while out-of-state tuition and fees at public universities have risen 141%. In-state tuition and fees have grown even more, increasing by an eye-opening 175%.

By taking out a life insurance policy, you can help your family pay for your children’s education even if you’re not around to do it yourself. Read on to learn more about using life insurance for your children’s education.

In this article:

How life insurance works

Life insurance is a contract between you and an insurer. When you purchase life insurance, you make regular premium payments in exchange for a death benefit upon your passing. Your policy’s beneficiaries receive the death benefit after your death.

Typically, you would choose as a beneficiary anyone who depends on you to pay for things. For most people, that’s a spouse.

But you should also consider naming a guardian as a contingent beneficiary. That’s because of the possibility that you and your spouse die at or around the same time (together in a car accident, for example). It’s also because children under 18 cannot be a beneficiary on a life insurance policy. The guardian would ensure that your child or children receive the money you intended to leave them through your policy, and that the money goes toward what you intended it to go toward.

For most people, term life insurance is the most affordable type of life insurance. You receive coverage for a specific period (usually 10, 20, or 30 years), typically the years when you are earning a salary and have financial dependents. And if you have a level term policy, your premiums remain constant during the term.

If you outlive your term, the policy ends. (Or you can continue coverage at a higher premium.) But good news: You’re still alive. And if you need additional life insurance coverage — either a higher amount, or a longer term — you can always apply for more. (Though you should be aware you might not be approved.)

What can a life insurance payout be used for?

A life insurance payout is delivered, tax-free, as a lump sum payout to your chosen beneficiary (or beneficiaries). It can be used to cover practically any expense your loved ones may incur after your death.

The most immediate use for a life insurance payout is covering funeral expenses and other bills you might have left behind. But provided you have enough coverage — experts recommend getting a policy worth 5 to 10 times your annual salary — that money can also be used to help pay for housing (either rent or a mortgage), cover outstanding debts, even day-to-day things like clothes or the grocery bill.

And as you probably guessed, that list can include your children’s college tuition or other educational expenses, such as tuition fees, room and board, books and supplies, and more. Even if your child plans to pay for their own education (or earns a full-ride scholarship), a little extra spending money never hurts.

And we don’t just mean for college or university. Well before then, your child is likely to need help paying for things like books, field trips, school fundraisers, enrichment fees, and more. And if your child attends private school, the death benefit from your life insurance policy can help pay for that tuition, too.

And if you have especially young ones, preschool tuition is another cost that can be paid for with a life insurance death benefit.

How Haven Life can help

Whether you just had your first baby or your firstborn is about to become a freshman, now is a great time to provide financial protection.

If you need a longer policy — say, 25 or 30 years to cover a mortgage and that far-off tuition — you can lock in a lower rate now, while you’re relatively young and healthy. If you’re older, you can get a shorter term (at Haven Life, we start at ten years) to cover the time when your kids are at school.

A 30-year-old woman in excellent health can get a 25-year Haven Term policy worth $500,000 for just $20.81 a month. A 45-year-old woman in excellent health can get a 10-year Haven Term policy worth $500,000 for just $23.73 a month. That’s less than the cost of a pizza dinner for you and your young scholar.

Get started with a free online life insurance quote today.

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About Ashley Franklin

Read more by Ashley Franklin

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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