College Planning Using CVL

Using CV Life Insurance for College Planning:

Does it work?

            The short answer to the above question is that it can work, but not nearly as well as you’ve been led to believe.

            One of the reasons I decided to start educating on college planning is because it’s one of the few topics advisors can talk about today that can really motivate a client.  It’s a tough world out there and it’s become very difficult to get current and certainly new clients in the door who want to talk about our services (insurance, finance, etc).

            However, when you can talk about a topic that affects a client’s children or grandchildren’s future, you’ve got a very motivating topic. 

            Using CV Life Insurance for College Funding: Does it work?

            It seems that insurance companies and IMOs have also caught onto the fact that college planning is a motivating factor.  I am starting to see more and more ads touting the use of CV life as “the” funding tool.  Unfortunately for the consumer, CV life only works with a specific fact pattern and is not the cure-all that IMOs and uninformed agents make it sound like it is.

            Let’s cut to the chase, when does using CV life insurance work as a college funding tool?

            -When you overfund the policy not only with a budgeted contribution for college planning but also for retirement planning of the parent(s).

            -When the child is young enough and the client can pay significant cash to fund the policy ($10,000 a year for 5-years or more is ideal).

            When does using CV life insurance NOT work well as a college funding tool?

            -When the policy is funded with low dollar amounts of less than $5,000 a year

            -When there is not enough time for the cash to grow

            -When you assume rates of return of less than 5%

            I can’t tell you the number of times I’ve seen CVL illustrated with a low premium amount (this happens because most average clients don’t have more than $3,000 a year to fund for a loved one’s education).  It just won’t work.

FREE 10-page summary on
using CV Life for college planning

            We feel so strongly that advisors are getting bad or misinformation on the “proper” use of cash value life insurance for college planning that we are giving away for FREE a 10-pages summary explaining the math behind using CVL insurance for college planning (when it will work and when it won't).

            There are 5 (five) real-world examples using CV life as a college funding tool.  Three of them that are typically pitched by many agents that fail miserably as a funding tool.  One comes out ok and one works very well as a college funding tool. To download this 10-page summary, please click here.

            Posturing for financial aid

             There are many advisors running around the country telling clients to quickly move money from brokerage accounts to CV life insurance because life insurance is not a “counted” asset when applying for most college aid.   This may work a slim amount of time, but if a client earns over $70,000 a year, it is going to be tough for their child to obtain most types of financial aid by changing asset classes. Therefore, moving money to a life insurance policy to lower “counted” assets won’t help the child obtain aid most of the time (and therefore, the recommendation to fund CVL is not a proper one much of the time).

            Doom and gloom

            We are not here to be a doom and gloomer when it comes to using CV life for college funding. It not only works, it works great for the “right” client.  As you know, we tout the use of CV life to help clients create a supplemental tax-favorable retirement bucket of wealth.   When you can combine college savings with retirement savings, you have a lot to talk about with many clients (which is why college planning is such a hot topic right now).

            Summary

            If you are selling CV life insurance, you need to know how to properly use CV life insurance.

            If you are in the college planning space, you need to know how to properly use CV life insurance.

            If you want to grow your business with a very motivating subject matter, you should learn about college planning (it will be good for your business and good for your clients).

College Planning Education and Sales/Marketing Training

The next in person seminar will be announced shortly

            Because of the power of this topic and the lack of any “full” educational training courses (both college aid training and the proper use of cash value life insurance and FIAs), ECA has decided to introduce adisors to what we believe to be the best college planning educational course/sales platform in the industry. The training consists of a 2-day training course (that will be unlike anything available today).  

            To learn more, please click here or e-mail college@ecamarketing.com.