IUL for College Savings?

[DHK]

I agree that WL (and I've found an IUL that I really like too) are better for college savings.

In this thread here's the problem: We're dealing with a $12k lump sum, not an annual contribution.

That makes an ongoing contribution plan, such as life insurance, a not-so-good strategy for this lump sum.

 

[critter]

Some companies do allow you to prepay premiums. The 12 grand could be placed into such a plan.

 

[AlTheGud1sRtakn]

Some companies do allow you to prepay premiums. The 12 grand could be placed into such a plan.

I haven't come across that yet (at least not that I've noticed, though I don't know why I would have noticed that) but it's an interesting thought. Some firms that also manage securities will let you pay out of a mutual fund based account as well. Maybe you could dump the 12 grand into a short duration municipal bond fund and have annual premiums drafted automatically and still get a little appreciation on the balance in the mean time.

Interesting idea but I feel like now we're getting creative just to get creative.

 

[DHK]

Assurity has a "Premium Deposit Fund" to store cash for future premiums. Currently paying out 1% on it.

To be even more "creative"... you could put that money into a non-qualified annuity and do 72q distributions to a life policy too. But with only $12k, it really isn't much to work with.


But in comparing to a 529 plan... A-shares would probably be the only way to go. With a standard upfront sales charge of 5.75%... there would be an initial cost of $690 and investment management costs. Not to mention the risk to the principal for having it invested in securities. Better do a thorough risk-analysis before recommending a mutual fund/portfolio.

Fund Analyzer

 

[critter]

I haven't come across that yet (at least not that I've noticed, though I don't know why I would have noticed that) but it's an interesting thought. Some firms that also manage securities will let you pay out of a mutual fund based account as well. Maybe you could dump the 12 grand into a short duration municipal bond fund and have annual premiums drafted automatically and still get a little appreciation on the balance in the mean time. Interesting idea but I feel like now we're getting creative just to get creative.

It's actually not too high on the creativity ladder. It's a way to avoid turning a single premium plan into a MEC. I'd say premium financing would be creative; pre-paid premium not so much.

DHK has the best advice out of everything so far. Simply do a complete fact finder to see what their entire financial picture looks like.

 

[Justin Bilyj]

Mass Mutual has a lump-sum annuity that feeds a 7 pay wholelife with participating dividends.

 

[pfg1]

Mass Mutual has a lump-sum annuity that feeds a 7 pay wholelife with participating dividends.

Interesting. I'll have to check that out. What is it called? Is it paid up in 7yrs? Sounds like it... if so, that could be a nice option.

To answer your earlier question..... I like WL better than IUL in general, and for college savings, there is easier access to the cash much earlier if needed. No surr charges limiting the amt available.

 

[Eddie C.]

Would an IUL make sense for a parent who wants to sock away $12K for kid's college fund? I can't see it as making sense since the kid is almost 9 yrs old and will probably head off to college in another 9-10 yrs. Any suggestions on other products with no downside risk?

Plus it wouldn't make sense to try to even split the funds over a 3 year period even with min DB, Max CV. Think I may have to let this one go.

I agree, especially since most IUL's do not start builing up cash value until after 10 years, due to fees, commish, surendar charges, etc...

 

[slcbtff]

Voya has a premium deposit account that pays 3.5%. You would be able to stretch out the lump a bit so it doesn't cause a MEC. If you used their indexed product you should look at the Global Choice with their 1 year point to point or 2 year global strategy.

Either way.. not sure I could justify this strategy. You would take loans or withdrawals and then have to keep the policy in force till death to avoid the taxes. I guess it could work, but the client should know the risks.

I've see return of premium term used more often. It doesn't have that high of a return when compared to an IUL, but it does beat the bank.

With WL... you typically have 20 years before some favorable loans. Also, a lump sum decreases the potential for returns as the cost weigh on the deferred premiums.

529 plans make sense. Have a grand parent own them.

 

[GeminiGroup]

And we 'wonder' why the public does little to nothing when it comes to many insurance offerings....a confused minds does nothing and how CAN'T one be confused when even the PROS seem all over the place, on advice.

When licensed 'trained' agents go
what about this....
well haven't you heard of that......
wouldn't do that b/c of this....

so many diverse ideas and opinions on what to do w/ other ppl's money (lives) there's no wonder why ppl say 'eff it i'll just leave it in the mattress vs picking wrong.