CASE STUDY: Parents Purchase $50k Policy for Their One-Year-Old Child’s College and Retirement Fund

Case study summary:

• Parents invest in genStream to help their child afford college and retirement.
• For the first five years of the child’s life, the parents contribute $10,000 annually.
• The genStream cash-value life insurance policy turns the parents investment of $50,000 into $40,000 of income to supplement four years of college tuition and almost $600,000 annually between retirement ages 60 and 120 – all tax-free.
• Unlike a 529 plan, genStream uses leverage to create intergenerational wealth.

The Bank of Mom and Dad just got smarter

Mr and Mrs Hudgins from California knew that opening the Bank of Mom and Dad was inevitable. If their newborn could talk, they might say, “Hey, could you sling me ten grand for the first five years of my life to set me up for college and retirement? Sweet, thanks! Now, where’s my pacifier?”

Through community word-of-mouth, the Hudgins discovered our genStream Plan, an appealing investment alternative to the traditional 529 college saving plan. They approached The Stream Team, and we them through how $50,000 could set up their child’s future.

$50,000 equals a lifetime of security

After the birth of their boy, the Hudgins purchased a genStream policy, which is our generational wealth transfer model. For the first five years of the child’s life, they contribute $10,000 annually, totaling $50,000. This investment uses bank loaned money to boost a cash-value life insurance policy. Once their child turns 18, they’ll have access to approximately $40,000 tax-free annually for four years to support their college journey.

Parental control of college funds

Parents ideally want college funds used wisely rather than racking up a collection of empty kegs and junk food containers. genStream ensures parental permission to access the policy until (or if) they hand over control. Plus, life can throw curve balls or present unexpected opportunities. Unlike a 529, which restricts colleges to participating states, genStream offers flexibility. It allows for selecting colleges based on preference, not location, and supports alternative paths such as studying abroad or entrepreneurial endeavors in place of college.  

A little for long-term growth

After four years of drawing $40,000, the income stream pauses so the Hudgins can, once again, leverage against the policy to ensure their child’s comfort later in life.

This initial $50,000 investment will then generate a second tax-free annual income stream of just under $600,000 for their child’s retirement, from ages 60 to 120.

A legacy of generosity

If Hudgin Jr. becomes financially successful and doesn’t need to rely on the genStream tax-free retirement income, Mr and Mrs Hudgin can use the wealth for their own golden years, or pass it onto a charity of choice.

*Name changed to protect privacy