Table 1 illustrates the life cycle for the superfunded low-load universal life policy Jeff will purchase. Two years later their daughter will be ready for college and the withdrawals will increase. Jeff and Chris realize that this amount of funding won t cover all of the educational costs incurred by their children, but they do expect them to work summers and part time during school. Withdrawals for college education funding. Withdrawals are tax-free.
Withdrawals begin to supplement retirement funds.
They are considered a tax-free return of principal. Then the withdrawals would be taxable. I am not convinced that this will work and therefore don t plan for it. The ownership of the policies insuring Jeff s life needs to be considered. The purpose of the irrevocable trust is to keep the proceeds, should Jeff die while they are in force, out of his and Chris estates.