Why choose a 529 over WL?

Correct. There are many options. With a WL policy, the expenses involved usually don't have options, you just pay them.

James - your avoiding the whole part about expenses on a life policy. I'm not sure why.

Dan

I think we all know the expense of PWL, as in any vehicle there is an expense. I'm simply suggesting that the added expense in PWL, can not be viewed as an even exchange in the expense of any given Qualified Plan as we are discussing. Even if you choose a 529 does not mean you shouldn't have a PWL in placed. Dividends which you choose to reinvest in the policy do not affect cost basis of the policy.

There is no direct way to compare cost of a WL and a 529, its a nonsensical debate. Only thing we can do is compare what that money will do as a PUA vs what it will do in a 529. If I take the last ten years, since 1998 since my son was born in 1997 my WL from MM (as in return from the PUA) smokes the 529 in value.

Still you have to account for normal human action, people tend to invest in a conservative manner or attempt to time the market or just picks a fund that look good in the last few years. In any case, they'll rarely beat a 9.4% they could of made at MM with PUA added to their WL Policy.

Since a few commented that no PWL is paying in the range of 6-8% only displays the ignorance many have about PWL in general. Even IM the blue collar company is paying 7% on average, current dividends paying around 5% and 2% on the guarantee side of the contract depeding upon what policy you take.

Everyone should have a PWL, that is without question. There is on other vehicle out there that gives so much in the way of guarantees and guarantee growth if managed correctly. I took out that WL on my son, now if I decide to place college money within the WL now I can do so as a PUA and in fact lowering the cost of the policy itself as in "InsuredDeathBenefit=BaseDeathBenefit - GuaranteedCashValue."
 
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Also...dividends ARE NOT guaranteed. An we all know that dividend projections often fall short.

In the end is that all you have? Dividends are not guaranteed, you could of left it that, while that statement is obvious it is unlikely, far more unlikely that MM or any of the fine Mutual Life Companies will not pay a dividend compared to any one Mutual Fund or Money Market or Equity will return a positive return in any given year.

As the projections, I think you are confusing PWL with UL's?
 
"As the projections, I think you are confusing PWL with UL's?"

No. I was referring to WL policies. ULs don't pay dividends.

You got me on that one, I seen projections, okay show me some that abuse the "Illustration". Or just provide me with the names of the carriers you think are abusing the projections on the Mutual side of the business.
 
I'm not sure what you mean by "abuse." When a mutual company does not meet their dividend projection, it's not necessarily abuse. Generally, it is market conditions, expenses, mortality, profit margin etc...

I'm thinking you posted that in a manner of muddying the waters between known abuses of UL's with PWL. I rarely see an illustration from anyone I know of including myself that shows anything above 7% with MM, 5% with IM and so on, there is no misdoings I can tell with the PWL Illustration.
 
I'm thinking you posted that in a manner of muddying the waters between known abuses of UL's with PWL. I rarely see an illustration from anyone I know of including myself that shows anything above 7% with MM, 5% with IM and so on, there is no misdoings I can tell with the PWL Illustration.


James -

.... long reply not posted so I don't get in trouble with my broker/dealer......

I'll shorten it to say, anyone would be well served to read this thread in its entirety, and then do research on their own. There are a lot of unproven 'assumptions' made, and misleading statements, that if you don't understand the vehicles being discussed, may lead you to incorrect conclusions, either way.

Dan
 
James -

.... long reply not posted so I don't get in trouble with my broker/dealer......

I'll shorten it to say, anyone would be well served to read this thread in its entirety, and then do research on their own. There are a lot of unproven 'assumptions' made, and misleading statements, that if you don't understand the vehicles being discussed, may lead you to incorrect conclusions, either way.

Dan

Dan,

It was you that attempted to get me into a direct comparison of a 529 and PWL. That is basically nonsensical at best on your part. Outside of that I don't know what assumptions you are talking about that was in any way misleading?
 
Your 529 Plan
A shares 5.7% cost not reflected....Mass Mutual, add 2% as guaranteed

1998 +11.1------------------------------+8.4
[FONT=NewsGothicBT-Roman*1]1999 +3.5-------------------------------+8.4[/FONT]
[FONT=NewsGothicBT-Roman*1]2000 +15.9------------------------------+8.2[/FONT]
[FONT=NewsGothicBT-Roman*1]2001 +8.2-------------------------------+8.2[/FONT]
[FONT=NewsGothicBT-Roman*1]2002 –6.3------------------------------+8.05[/FONT]
[FONT=NewsGothicBT-Roman*1]2003 +22.8-----------------------------+7.9[/FONT]
[FONT=NewsGothicBT-Roman*1]2004 +8.9-------------------------------+7.5[/FONT]
[FONT=NewsGothicBT-Roman*1]2005 +3.1-------------------------------+7.0[/FONT]
[FONT=NewsGothicBT-Roman*1]2006 +11.8------------------------------+7.4[/FONT]

Now obviously the WL has expenses, yet I never suggested it didn't. I suggested the money go into the policy under PUA, cost of the policy under my assumption is not a point since it is already present. In other words the cost of Insurance isn't significiant, unless you want to suggest that the person shouldn't have insurance in place and no DB to guarantee the funding of college plan?

The only real debate here is how fast can I get Cash inside the PWL without triggering MEC. Plus your plan stops at a definite date, if all monies isn't use for college funding then you face a fairly large penalty. Under my plan, the cash value does not face the same strict regulation regarding education.

I do agree, any and all Agents should understand PWL, if they did there would be a lot less UL's sold!
 
Dan,

It was you that attempted to get me into a direct comparison of a 529 and PWL. That is basically nonsensical at best on your part. Outside of that I don't know what assumptions you are talking about that was in any way misleading?

It's not when the goal is strictly college funding.

Again, I encourage you to look at putting a $100 a month aside, either into a PWL or into a 529, use historicals to see which one at the end of 5 / 10 / 15 years would have had the most liquidity. In both cases make sure you understand:
- Contribuition limits (i.e., MEC issues on PWL, limits on 529). At a $100 a month, neither is likely an issue. At larger contribution limits, it could become an issue.
- All expenses. Sales charges / 12b1 fees on a 529, mortality, admin fees, etc on PWL.
- How you can access the money for college. 529's are setup for this. PWL's require either a loan or withdraw, both have consequences that have to be understood.
- What happens if you don't go to college or continue education? PWL's have an edge here, though 529's have options available as well.
- Impact on availability of other student aid.

Again, it's all about what the best fit is for the client.

Dan
 
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