Affording Higher EducationCollege Funding 101

The Guardian Life Insurance Company of America, New York, NY 10004-4025

Pub57332012 - 7988

Important Disclosure – Please Read

Please note that the information in this presentation is not directly related to products sold by The Guardian Life Insurance Company of America. This is general information provided for educational purposes only. This presentation should never be used as a sales tool for replacement of any life insurance policy.

The Guardian Life Insurance Company of America, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax and legal advisor regarding your own financial situation.

Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.

Please note that policy benefits are reduced through withdrawals, loans, and loan interest.

2012- 2013 College Costs

• Private colleges and universities – $35,000 to $60,000 annually

• State universities –$16,000 - $19,000 for state residents; $20,000 - $32,000 for non-state residents annually

• Add on fees, books, clothing, etc.

Costs x 4 years = +/- $250,000

Rising Trend for College Costs

College Costs Enrolled in 2010Enrolled in 2028

(projected)*

4 Years of Tuition - Private College $119,400 $340,800

4 Years of Tuition - Public University (in

state)$33,300 $95,000

*Based on average tuition and fees for 2010-2011 as reported by The College Board® and assumed to increase 6% annually.**Trends in College Pricing 2009, The College Board®.

• College costs will continue to rise.• In the past 10 years, the average inflation-adjusted cost of

tuition and fees has risen by 28% at private four year colleges and just under 50% at four-year public colleges.**

“How America Pays for College” – Sally Mae and Gallup. New York Times article by Catherine Rampell – July 2010

How Some Pay Today

Common Choices for College Funding

• 529 Plans– Advantages: Tax deferred growth; tax free access– Disadvantages: Market volatility, must be used for a U.S. college for

tax benefits• UGMA/UTMA

– Advantages: Upside market potential; variety of investment options– Disadvantages: Market volatility; limited tax advantages

• Coverdell ESA– Advantages: State tax deductions; tax-deferred growth– Disadvantages: Restrictions on amount of contribution and income.

• Savings Account– Advantages: Secure, stable-- Disadvantages: No tax advantages; low return

Key Considerations

• What if the child doesn’t attend college, or go to one in the U.S.?

• What if the market doesn’t turn around quickly enough?

• What if the individual funding the plan dies or becomes disabled?

Consider Life insurance

The Uncommon Choice:Whole life insurance

• Immediate asset protection• Tax free death benefit• Tax-deferred growth• Tax-advantaged access to

policy loans• Wealth accumulation not

connected to market activity

What Else?

• Death and Disability protection – pays a guaranteed death benefit in case of death; self-completing with Waiver of Premium rider (available at extra cost).

There’s More

• Potentially not considered for federal college financial aid (although some colleges use alternative disclosure forms)

• Lifetime of benefits, whether or not the child attends college

• Simple to implement and monitor

Products Designed for Flexibility

• Whole life insurance– Full Pay– Limited Pay

• Riders and Options-- Waiver of Premium-- Guaranteed Insurability -- Paid Up Additions

Five Reasons to Give the Gift of Life Insurance

1. Legacy – provides a significant legacy for future generations while reducing the size of your estate

2. Control – the policyowner controls the asset, so use can be properly directed

3. Insurability – when the policy is on the child, it can lock in future insurability

4. Self-completing – will continue to build in value and stay in force in case of disability

5. Tax-advantaged – offers tax-deferred growth, income tax-free death benefit, and access to living benefits.