When you bring home a new baby, your first thought probably isn't about life insurance...or your baby's college education. After all, you've got time to worry about these details later, right? Now, you just want to focus on getting a bit more sleep.

But now is exactly the right time to start planning for the future. The sooner you act, the easier it will be to create a good mix of financial options for your growing family.

How Can Life Insurance Help Pay for College?

Permanent life insurance creates cash value. Think of your cash value as equity in your policy. The longer you own the policy and pay into it, the greater the cash value of that policy becomes. A portion of each payment goes into this cash value account. It grows tax-deferred over time, so if you were to insure yourself now, by the time your little one was ready to head for the Ivy League, you could have a hefty chunk of change to pull from in order to help pay for expenses.

When it comes time to talk tuition, permanent life insurance has several big advantages over traditional college funding sources. Let's take a look at some of these:

Life Insurance and 529 Plans or Coverdell Accounts

If you're planning ahead for college, you'll probably hear about 529 plans or Coverdell accounts. These are special savings accounts that allow you to sock money away for a child's college education. New parents are often encouraged to open one as soon as possible. It has federal tax advantages because your money grows tax-deferred, but here's the thing: you can only use that money to pay for qualified educational expenses at schools accredited in the U.S. Qualified educational expenses include things like tuition, room and board, and books.

But what about expenses that don't fall under that umbrella? What if your college student needs transportation money to get to work or to class (if they live off-campus)? Your 529 plan isn't going to pay for that. What happens if your child decides to go to college outside the U.S. or at a technical or vocational institute that's not accredited? That's not going to be a qualified expense.

Or what happens if your child decides not to go to college? Saving for that possibility is a great idea, but if it doesn't happen, you're going to pay income tax on the money you pull back out of the account. You'll also owe 10% of the account's earnings, and you may even owe additional state tax if your state lets you take tax deductions during the years you contribute to the account.

For versatility and flexibility, life insurance is a smarter choice. If you pay for your child's college expenses with your policy's cash value, you aren't limited to qualified educational expenses. You're not limited to accredited U.S. schools. And if your child doesn't go to college, you can always use that money for something else—without paying a penalty to do so.

Of course, the main reason to buy any life insurance policy is the financial security and peace of mind it brings your loved ones. Don't lose sight of that as you're planning for those college expenses. Ready to get started? You can get a quote right here on my website.

Have more questions? I'm here to help! Give me a call or send me an email today.