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Goldnut?
For me before I start laying out the opinion, I like to know more about the purchase and the company. If not having more information isn't necessary for you to put your opinion out there, well good for you.
Since the OP isn't an agent, they could have all sorts of products from all sorts of companies that call their product whole life or permanent insurance. I just find before I speak in absolutes that I know what I am supposed to be giving an absolute opinion on.
Cheers.
Based on what he said the premium is $6500 and a rider for $3500 which tells me it's not any type of UL policy. He said it was whole life so it's really not that complicated. Since this is a general message board all we can do is provide general help.
Once again I am not opposed to whole life I just don't like it being used when there are better options out there.
I still not heard why whole life would be an ideal funding choice for college in this instance.
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You don't. Income is the biggest factor in the FAFSA, but we've been talking about the asset, not their income. A 529 plan is treated WORSE than life insurance in the overall calculation. In my opinion, every little bit helps.
Oh, and restructuring assets ONLY for FAFSA purposes... is not a good enough reason to do it. It must be a coordinated and integrated strategy that takes someone through their retirement years and "hiding assets from FAFSA" is a side-benefit, not a sole reason to do it.
Financial Aid Strategies With a Catch
One caveat in favor OF 529 plans - if your state plan offers a tax-deductible contribution, that can skew the recommendation in favor of those plans. California has no such deduction for their state
I might trust my kids at age 8 when I start (it is a good idea to start early, right?), but if they start up the habits of theft and drugs at age 16 and keeps it going until they land in jail at age 22... I just might change my mind. What happens to the asset then? *I* would be penalized for withdrawing the money for non-qualified tuition expenses. (Yes, I could 'gift' it to another child or family member... but that was MY money and to do that just to avoid a penalty... would cost me 100% of the funds, over just paying a 10% penalty.)
Life and circumstances can change. I've found that life insurance can be the most adaptable product out there for multiple various reasons.
With an income of $240,000 it really does not matter where his assets are. If he uses life insurance he is going to get either a negative or a very low rate or return on his money, then if decides to use it he gets to pay loan interest year and year after year!
How does paying loan interest help their retirement?
Why not just use a very conservative bond fund or maybe a floating income fund and be able to withdrawal the money and not pay the interest?
Maybe the guy is not security licensed and cannot offer the 529 so life insurance is all he's got to offer.
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