<p>When you consider that one reason for taking out a life insurance policy is to cover college for your children it would make sense that it is counted as an asset…I agree it is not “income”. I can see how, if the funds are available, it would be counted. If the funds are spent on other family debt then the funds would not be available and would not be counted. If the funds are disbursed, but not spent, before FAFSA filing then a meeting with FA might be in order, with proof of other bills to be paid. If there were not other debts, would people still expect the insurance not to counted as assets? Like, I said, having $ to pay for things after you are gone is why you take insurance. You don’t get to keep it on one hand, and say you have no $ on the other…</p>
<p>I am talking in a lot of generalities here, not to the the OP situation. If there is a lot of medical debt etc, then I’m sure the school will take it into account. Every situation is different.</p>
<p>Will there be social security survivor benefits for the children. That will keep the family going until the survivor finds work. Once he/she has an income that pays the bills I hope the SS $ is banked for college expenses. (as opposed to the kids spending it willy nilly–a 16 year old neighbor spent his on a quad and a dirt bike, in a neighborhood where it’s illegal to ride them)</p>