Starting college funds for grandchildren

Becoming a grandparent is a monumental moment in life. You’ve already been a parent and played a major role in raising your child into adulthood. Now you’re witnessing a new generation come into your family. Yes, your new title of grandparent may make you feel older but it brings with it feelings of love, pride, and adoration. And a common act when we celebrate a new life is to bestow a gift.

The greatest gift to your new grandchild would be a bright future of opportunity. So, why not give the gift of education? Rather than a tangible item that may last only a few days or weeks, college funds for a grandchild will continue to provide value for years to come. A 529 plan and supplemental funding from a whole life insurance policy may be able to do more than traditional savings accounts for grandchildren. These savings vehicles provide a path to a quality education and financial stability on your grandchild’s journey through life. You may even want to use the portion of your estate that you plan to leave to your grandchild for a life-altering gift that can be delivered now. Starting a plan now that will support your grandchild through college and help your grandchild enter the workforce without the burden of student debt may be the most generous and thoughtful gift possible.

One of the most common ways to save for educational costs is with a 529 College Savings Plan. A 529 plan can be a great way to save for a child’s education and offers a number of financial benefits, including generous contribution limits, favorable state tax treatment for state residents, tax-deferral of earnings, and tax-free distribution when used for qualifying expenses. Money you put in a 529 plan is generally invested in investment portfolios you select from an array provided in the plan, but keep in mind that the details of a 529 vary by state. A 529 plan is subject to investment and market risks, so a downturn in the market can leave you with less funds than you need. Of course, there are a number of other college savings options available. Talk to your financial professional for more information. 

The gift of life insurance for grandchildren is another option for securing their future. A whole life insurance policy from New York Life offers much more than the life insurance benefit. Adults purchase whole life policies for children for a variety of reasons:

• Because the insured is so young, the premiums will be low and will never increase.
  
• The child gains lifelong protection that’s backed by a financially stable mutual company.
• The cash value grows tax-deferred over time and can be used for important expenses to offset educational costs.
• Growth in value is guaranteed and is not tied to a volatile stock market.
• There’s an opportunity to receive annual dividends. Dividends aren’t guaranteed, but New York Life has paid them for 166 consecutive years.

With whole life insurance from New York Life, you have the ability to choose how the policy is structured so you know exactly how much cash value your grandchild will have at a specific time in the future. Cash value of the policy can be accessed for college costs and also for other purposes. If your grandchild earns a full scholarship or ends up on a different path than anticipated, the cash value of the insurance policy can be accessed for things like a down payment on a home or seed money to start a business.¹

There are different ways to support your grandchildren and celebrate your new role as a grandparent. The most valuable gift you can provide is one that supports their dreams and talents, enabling them to follow their own paths through education and career. Connect with a New York Life financial professional today to figure out the type of gift you want to give as your legacy.

¹Accessing the cash value will reduce the available cash surrender value and total life insurance benefit of the policy. Policy loans, which accrue interest at the current policy rate.

A whole life policy involves insurance fees and charges, while a 529 plan does not. However, a 529 plan involves investment fees and charges. A whole life policy involves the risk of lapse, in which case the insured would lose the insurance benefit. Guarantees are based on the claims-paying ability of the issuer.

A 529 plan investor should consider the program’s investment objectives, risks, charges, and expenses before investing. The program disclosure statement, available through your financial professional, contains more information, and should be read carefully before investing. Before investing, investors should consider whether their home states offer 529 plans that provide state tax and other benefits only available to state taxpayers investing in such plans.

Neither New York Life Insurance Company nor its affiliates and agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions

In Oregon, the policy form number for New York Life Whole Life is ICC18217-50P (4/18). 

New York Life Insurance Company(NY,NY). Securities are offered through NYLIFE Securities LLC (Member FINRA SIPC), a licensed insurance agency and New York Life company.