The Importance of a “Self-Completing” College Fund Program

June is a month filled with graduations—mortar boards flying, large slices of graduation cake, toasts to a job well done. But behind all the celebration is a serious question for those with children whose college graduation is in the distant future: Do you have a “self-completing” college fund program?

The actual total cost of four years of college education (i.e., tuition, fees, room and board) at an average public in-state university for the years 1979-83 was $10,945. The actual total cost of that same college education for the years 2009-13 was $66,370. Thus, the cost of obtaining a four-year degree has increased 6.19% per year over the last 30 years.

This means that your new baby will need almost $260,000 to finish a four-year public college when she starts in 18 years. How much have you saved for her college fund? How much will you save for her college fund?

If you earn 5% per year on your investments, you will need to save $739 per month to meet your goal, but what if something happens to you along the way? Do you have a self-completing college fund program? Did you know you could buy $250,000 of 20-year level term life insurance policy for less than $20 per month?

A permanent life insurance policy with a death benefit beyond age 100 is around $100 per month, and unlike term insurance, by year 20, the amount of premium paid and the cash surrender value are the same, meaning that at year 20, if you no longer need or want the policy, you can cash it in with a full refund of your premiums or continue to pay premiums, retain the death benefit and build more cash value for future use.

These are just two options for you to consider. There are many others that your agent or financial advisor can provide you. Call them today for more information.

Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of Life Happens

by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

  1. Assuming no interest, if you were to calculate that $40,000 will be needed for college and you begin putting money away monthly two years before the child starts college you will have to sock away $1,666.67 per month for 24 months.

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