IUL Vs. 529 - Opinions?

2112Greg

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Title pretty much says it all.

I'd like to have opinions on the wisdom of using IUL to fund college, especially compared to 529 plans.

What say ye?
 
Here is a graphic I use with clients. There's more to the conversation than just the graphic, but I provide an alternative to the usual conventional wisdom of 529 plans. PLI in the chart refers to my version of a MEC contract. Not a "modified endowment contract" but a "Maximum Efficient Contract". Whole Life funded to the MEC limit.
 

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I'll leave alone the arguement of one over the other. Although I do like permanent life insurance for many uses.

Just make darn sure that your client knows exactly what they are buying and all the downsides. The last thing you need is a case of amnesia when time for college rolls around and there isn't enough cash value to pay for college. Or an investment focused advisor to start asking why they have life insurance and not a 529.
 
Yes, I wasn't looking for a 'sales pitch' to convince people to buy one over the other, rather I'm looking to affirm my gut feelings about why PLI is better, in many ways, than a 529. I'm leaving health insurnace behind and am working with a group to market this concept. They have had tons of success with it and I love the idea, personally. I'm looking for 3rd party confirmation and insight into the concept...

Thanks for that graphic, I assume you won't mind if I lift it, Larry?
 
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That's good stuff, Larry. I was asked about this the other day at a seminar. One question - why the question mark under "Creditor Proof"?

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That's good stuff, Larry. I was asked about this the other day at a seminar. One question - why the question mark under "Creditor Proof"?

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Each state has different rules concerning cash value of life insurance and creditors. In Tennessee, it is unlimited as long as it is for the benefit of the spouse. Some states may cap the amount, and/or expand the list of beneficiaries that attach creditor protection.
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One question Greg, do you have a securities license? I ask because I could see an issue if you are promoting IULs over 529s simply because you lack the ability to do 529s.
 
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That's good stuff, Larry. I was asked about this the other day at a seminar. One question - why the question mark under "Creditor Proof"?

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It's what VolAgent said. Here is a link that was accurate as of 2007: State Exemption Chart on Creditor-Debtor Issues

Some assume that annuities also enjoy the same preferred tratment as life insurance, but that's not necessarily true. For example, in NC annuities are not specifically mentioned in the NC General Statutes, so in absence of clear written exemption, you must assume they are not protected. Check your State's law. Florida, Texas, and Oklahoma are very liberal in their treatment.
 
I'm a proponent of permanent LI, but usually favor 529 plans. PL can fit in the right situation, but in practice it seems to be more of a niche solution for college funding.
 
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