Life Insurance and Your Student Loan
Not many people use life insurance and student loan payments in the same sentence, but we do. This is a growing trend and for good reasons. Below we will explore just a few of the benefits. Maybe this could even be the answer to helping you get out from under your student loans.
What Type of Life Insurance Works Best
When paying off your student loan in many cases, not all, but in general we suggest to our clients a type of insurance policy called an IUL or Index Universal Life. An IUL is a very effective cash growth vehicle. By using after-tax money to pay policy premiums along with the fact that the policy proceeds are tax-free. An IUL is different from other life insurance policies in the fact that part of your monthly premium is invested in a financial index such as the S&P 500 and many others which may give you a larger return than other policies. Since part of the premiums are invested in an index, we can even design these policies with multi assets.
How to Use the Policy to Pay Your Debt
Here is how the IUL can be used to pay your student loans. Most IULs allow you to take early withdrawals (or loans) from the policy tax free. You can withdrawal from your IUL to pay down your student debt. The withdrawals can be penalty free with the right policy design.
At Bender Advisors the policies we deal with, you do not have to pay back the money you withdraw; it just reduces the payout at death.