Life Insurance payout

[Mwfan1921]

@Publisher

P.S. Regarding your statement: “Per example, non-qualified annuities will have to be reported on the CSS profile.” I think that you may misunderstand valuation of an annuitized life insurance death benefit payout. The value would be the annual payout received, not the lump sum purchase price of the right to receive a monthly payment for life or for x number of years; accordingly, based on my understanding, the value of a lifetime monthly payment of $2,000 per month would be $24,000 of income each year, NOT the total death benefit of several hundred thousand dollars which was used to fund the annuity.

Non-qualified annuities are reported as investments on FAFSA and CSS Profile. Distributions are treated as income on both.

See analysis in the following article. It makes sense that non-qualified annuities would be included as an investment because (as Mark Kantrowitz writes):

Otherwise, if a non-qualified annuity were considered to be a non-reportable retirement asset, nothing would stop a family from making a lump sum contribution to a non-qualified annuity before filing the FAFSA, thereby sheltering the money from need analysis, and then taking an early distribution after the child graduates from college. The tax penalty on early distributions applies only to the earnings portion of the distribution, which would be small over the short term of a child’s college career.

What’s the Difference between Qualified and Non-Qualified Annuities?

IME many CFAs, CFPs, and CPAs know very little about saving for/financing college.