SECOND THOUGHTS on Whole Life Insurance 1 Year in - ADVICE???

[DHK]

I agree that using whole life for the ONLY purpose of saving for college... is probably not enough. Life insurance cash values can be used for various and multiple uses, but if it's "just for college"... I don't see it as enough of a reason.

That being said, it would be a shame to ignore life insurance as a savings solution. Even Solomon Huebner wrote about how life insurance creates certainty in saving for college. Granted, he was probably referring primarily about endowment policies (such policies no longer really exist; but you could consider a limited pay policy instead - for the purpose of loans or withdrawal.).

I'd post the PDF itself, but it's just too big for the forum limits. Here is the link direct with The American College:

"Life Insurance as a Financial Basis for a College Education" by Solomon S. Huebner PhD

Then there's "Life Insurance Savings Compared To Other Savings" that he wrote, but way back in 1923. (I added the highlighted parts of a few key sections of it.)

 

[Golfnut2112]

I agree that using whole life for the ONLY purpose of saving for college... is probably not enough. Life insurance cash values can be used for various and multiple uses, but if it's "just for college"... I don't see it as enough of a reason.

That being said, it would be a shame to ignore life insurance as a savings solution. Even Solomon Huebner wrote about how life insurance creates certainty in saving for college. Granted, he was probably referring primarily about endowment policies (such policies no longer really exist; but you could consider a limited pay policy instead - for the purpose of loans or withdrawal.).

I'd post the PDF itself, but it's just too big for the forum limits. Here is the link direct with The American College:

"Life Insurance as a Financial Basis for a College Education" by Solomon S. Huebner PhD

Then there's "Life Insurance Savings Compared To Other Savings" that he wrote, but way back in 1923. (I added the highlighted parts of a few key sections of it.)

The article is very dated and does not address the problem of getting the money out. If you buy WL for the lifetime protection that is fine.

 

[jboussea]

The article is very dated and does not address the problem of getting the money out. If you buy WL for the lifetime protection that is fine.

I know we've lost track of the OP s question..but to be clear ..she was using funds of the WL for college but that wasn't the sole purpose of th WL.. .

 

[Golfnut2112]

I know we've lost track of the OP s question..but to be clear ..she was using funds of the WL for college but that wasn't the sole purpose of th WL.. .

There was an OP?? We are 7 pages in, I can't remember that far back.

 

[Tahoe Ray]

The article is very dated and does not address the problem of getting the money out. If you buy WL for the lifetime protection that is fine.

You can just withdraw your money like you do out of a mutual fund...it's not like you're required to take loans.

FIFO treatment too...just no leverage on future dividends.

Bottom line is if your bond portfolio is hovering around 4%, then WL isn't a terrible deal.

If you're willing to take more interest rate risk to seek higher returns, then WL is probably a bad deal for your overall portfolio.

I don't like these absolutes...WL+corp/intl bonds can be a strong combo.

 

[Golfnut2112]

You can just withdraw your money like you do out of a mutual fund...it's not like you're required to take loans.

FIFO treatment too...just no leverage on future dividends.

Bottom line is if your bond portfolio is hovering around 4%, then WL isn't a terrible deal.

If you're willing to take more interest rate risk to seek higher returns, then WL is probably a bad deal for your overall portfolio.

I don't like these absolutes...WL+corp/intl bonds can be a strong combo.

I do agree about the 4%. I have 2 whole life policies on issued in 1988 and the other in 1993. The one issued in 1993 is with NYL and is doing really well. It's not the rate of return I'm earning it's the cost I would pay to use the funds.

 

[Tahoe Ray]

I do agree about the 4%. I have 2 whole life policies on issued in 1988 and the other in 1993. The one issued in 1993 is with NYL and is doing really well. It's not the rate of return I'm earning it's the cost I would pay to use the funds.

But like I said, if you have that money in a bond fund, you need to withdraw the money anyway...you can do the same from your insurance policy without interest.

The loan ability is just an additional option.

 

[Golfnut2112]

But like I said, if you have that money in a bond fund, you need to withdraw the money anyway...you can do the same from your insurance policy without interest.

The loan ability is just an additional option.

You are correct I can withdraw all my dividends then I would need to loan out the policy for additional money.

 

[entrep1776]

There was an OP?? We are 7 pages in, I can't remember that far back.

7 pages in. 1 post by OP. OP Probably forgot they ever posted.

 

[scagnt83]

You are correct I can withdraw all my dividends then I would need to loan out the policy for additional money.

No you dont. You can withdraw Basis as well if you wish to do so.

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Also, the policy bought most certainly does matter. There are some very crappy participating WL policies out there that pay very little in dividends. Some even pay zero dividends despite being called a "participating" policy. No matter what, I would never recommend certain WL policies no matter what the situation is.