Why Do Parents Think This ?

[Mark]

Why do all new parents think they can purchase a life insurance policy that will cost them $20 or less and somehow have enough cash value to pay for college when the kid are ready??

20 x 12 x 18 = 4,320 what kind of interest rate do they think I would have to give them to do this??

 

[ineedhelp]

Re: WHy Do Parents Think This??

Because, to become a parent doesn't require reasonableness or foresight. Just functioning sexual organs.

 

[HealthGuy]

Re: WHy Do Parents Think This??

Mark: They believe this because lying sacks of s#$t that sell this kind of whole life crap deceive them. Simple. And its usually the NWML types. Let the firestorm begin.

 

[briko3]

Re: WHy Do Parents Think This??

Haha...I can hear it now..."We pay more dividends than anyone. Would I tell you it's so if it weren't?"

 

[scagnt83]

Re: WHy Do Parents Think This??

I dont care what investment product you use, $20 per month wont even fund a low quality community college!! Even at a constant 10% it would only be $12k after 18 years, and with inflation that will barely put a dent in college costs.

And chances are the parents already arent saving nearly enough for retirement. There are 1001 ways to finance college without having cash on hand. And the chances of the parents not having enough for retirement are much higher than the kids actually finishing college.

If all the parents can cough up is $20/month college savings should be the last thing on their mind!

 

[ergammill]

Re: WHy Do Parents Think This??

These are the same parents who at 60 yrs old, say "just let the kids take care of it", when you ask them if they have written their funeral instructions down and made arrangements for the $8,000 to $10,000 cost

 

[arnguy]

Re: WHy Do Parents Think This??

Tell them to get a 529 plan!

 

[insuranceexec]

Re: WHy Do Parents Think This??

Tell them to get a 529 plan!

You could also have them set up a 501c and go "fund raising." LOL

 

[Newby]

Re: WHy Do Parents Think This??

These are the same parents who at 60 yrs old, say "just let the kids take care of it", when you ask them if they have written their funeral instructions down and made arrangements for the $8,000 to $10,000 cost

They are also the same 60 year olds that believe a funeral will still cost $8,000 to $10,000 when they need theirs in 25 to 30 years.
They need $32,000 to $40,000 if prices double every 15 years.
I think we have established the answer to Mark's question is: they don't own a calculator and they don't understand the time value of money or inflation.

 

[NMFNMDRT]

Re: WHy Do Parents Think This??

Why do all new parents think they can purchase a life insurance policy that will cost them $20 or less and somehow have enough cash value to pay for college when the kid are ready??

20 x 12 x 18 = 4,320 what kind of interest rate do they think I would have to give them to do this??

I think you should educate them on both the true cost of college and a reasonable rate of return on their invesment. Generally, people have no clue how much money it takes to get to a comfortable retirement, fund an education, etc.

Tell them straight up that $20/month is good enough to get their child through half of the first semester. Let them know that $300-400/month is more like it, and you might end up getting half of that. Expect more and you will get more.

Also, you should never put all of your eggs in one basket with a 529. If the child doesn't go to college, then they take a huge hit. An overfunded life policy is an option, but there are other options as well. Take their risk tolerance into the equation too.