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Very informative thread with excellent contributions by forum members! Thank you.
I didn't respond earlier but want to contribute so that I'm part of your thank you.
You're welcome.
Rick
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Very informative thread with excellent contributions by forum members! Thank you.
Interesting. I never use UL or any variation of UL. I always use maximum funded (at the MEC limit) WL (with PUA rider) for college funding. You must know something I don't. I'm here to learn. Details please.
Why would anyone want to save up a bunch of money in a 529 (or anything else for that matter) and then give it to a college?
I dunno. You tell me.
I dunno either. That's why I help my clients find more efficient ways to pay for college.
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?
We must not be doing it the same way. I use a 60/40 split of base premium to PUA Rider. So, at the end of the first year my guy has enough cash value to cover 4 to 5 months of premium through APL (automatic premium loan). At the end of the 2nd year he has almost a whole year of APL ability. So, a WL doesn't just lapse if a premium is missed... at least not the way I do it. I could get greedy and use a near-MEC PU@65 with all base premiums and it works almost the same.Its mainly for the flexibility Larry.
Usually, college funding is on top of usual insurance premiums and retirement contributions; so college funding contributions are usually the first thing to go in the case of financial hardship.
If they cant make the premium on the WL then it lapses, if they cant make the premium on the UL they have some flexibility (most likely can make a very minimal payment or just wait until the next year).
Yes, I realize that a max funded WL will have some flexibility in premiums if need be, but not nearly as much as a UL.
One of the main selling points that stock jocks will use for 529s against PI is that the 529 has a flexible payment schedule. This helps eliminate that concern/objection.
I also realize that a WL will usually perform better at younger ages vs. a UL, but in the first 18 years its usually fairly negligible.
And on that note, I am a big believer in putting the insurance on the parent instead of the child.
If the parent isnt around, then future premiums will be in question (yes I realize that the parent has to have sufficient coverage in order to insure the child, but there still could be ambiguity); if the DB is on the deceased parent, the child will have more than the projected CV for college, so there will be less of an issue at that point.
Either parents or grandparents. Depends on the preference of the grandparents.Dang, I'll agree, one helluva thread.
So here's a scenario: Grandma & Grandpa want to set up Sally (7 yrs) and Bobby (10 yrs) for college. After being shown their options, they choose to take out Whole Life policies for both kids' college. You set it up at 60/40 premium/PUA. Questions:
1. Who owns the policy?
The owner. Forgot the name of the triangle, but insured, owner and beneficiary cannot all be different.2. Who are the beneficiaries?
What company doesn't take children?3. What company takes children on a whole life plan, or is this written on someone else?
It depends, generally you surrender down to basis and then borrow the rest. But if you want to do like Larry, you are better off borrowing from the beginning, that way you can pay it all back and have a larger cash value for the next time you need money.4. I assume dividends are accessed first, right? Then what are the tax ramifications after that?