How Juvenile Life Insurance Can Eliminate Student Debt
Much has been made over the rising cost of student debt
. With uncertain job prospects and a tepid recovery from recession, students are graduating with six-figures of debt and the prospect of three decades until repayment. A recent study by the Institute for Higher Education Policy found that nearly 2/3 of student borrowers are struggling making their monthly loan payments. Here"s another distressing fact, college seniors who graduated in 2009 carried an average of $24,000 in student loan debt, according to the Project on Student Debt. With high unemployment, graduates are finding it harder and harder to repay loans and falling deeper and deeper into a hole.
New Amsterdam Life founder and CEO James Garfinkel, has been advising parents and grandparents for thirty years on college savings strategies and is convinced that child or juvenile life insurance can solve the student debt problem.
juvenile life insurance provides tax-advantaged savings and growth opportunity inside a permanent insurance policy and is a perfect complement to existing college savings plans, like a 529 plan. Whole juvenile life insurance is permanent insurance that increases by a minimum guaranteed interest rate, plus a non-guaranteed dividend declared annually by the insurance company. Indexed juvenile life insurance is also permanent insurance, but has cash value growth linked to the performance of an equity index (e.g., S&P 500) up to a certain percentage (a "cap") with downside protection (a "floor"). With either whole life or indexed universal life insurance, cash value growth is tax deferred and the policy owner and can borrow or withdraw the accessible cash value for college or any other purpose.
If parents start saving early for their children, when their children are ready for college, the cash value of juvenile life insurance can be used to pay tuition, room and board rather than seeking federal or private student loans, reducing the students future debt burden. Unlike a 529 plan, there are no limitations on how the money is used. In fact, the cash value of juvenile life Insurance is excluded from the federal financial aid needs analysis process, which may help otherwise unqualified students become eligible for financial aid.
Barack Obama has recently introduced sweeping changes to reduce student loan debt and has made reducing student debt a focus of his Presidency. However, some of the most innovative solutions are coming from creative financial professionals like James Garfinkel, and companies like New Amsterdam Life, rather than the federal government.
by: James Garfinkel
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