The 60/40 is an approximate blend and will vary depending on the WL plan you use. The grandparents could own the policies or they could just pay the premium and the parents could be the owner. The parents would be my choice as insureds because they would likely still be insurable and also want the death benefit. Any company that offers WL will insure children, but I wouldn't use the children as insureds as they probably wouldn't be able to qualify for as much face amount as would be required to be able to accumulate any meaningful money.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?
2. Who are the beneficiaries?
3. What company takes children on a whole life plan, or is this written on someone else?
4. I assume dividends are accessed first, right? Then what are the tax ramifications after that?
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I prefer loans to dividend surrenders because with loans I can put the money back in the contract but I can't "unsurrender" a dividend. Using my garage analogy, surrendering dividends is like driving out of the garage and then boarding up the garage door so that I can't get the car back into the garage. Besides, there's no major diiference in the interest I pay on a policy loan versus the gain I forego by surrendering the dividend additions.
But again, I rarely have a college funding conversation in a vacuum by itself. Also, before spending assets, I would make sure they new how to complete the FAFSA, see what their chosen school has in scholarships, and also Stafford loans, etc.