College Funding Vehicle?

GAHEALTH

Guru
100+ Post Club
Okay for those you that do a lot of this - What vehicle and company/product combination is used most by you to put together a college funding program that will not count against the student/parent when trying to get financial aid?

Client is a family that is $75K-$100K family income. Mortgage $250K - not much equity in the house.
 
How old are the kids, where are they planning to go to school? How much do the parents want to pay towards education?
 
A bit late to be planning for college funding, isn't it?

You could try a UL with no surrender charges or a high early cash value WL. Something designed for the corporate market. Honestly, they are so late to the game, I can't think of many options.
 
Are they going to college when they turn 35? Seems a little late to be using life insurance for college funding if they're only 2-3 years away...
 
Are they going to college when they turn 35? Seems a little late to be using life insurance for college funding if they're only 2-3 years away...

I agree with both of you. They have a 529 in place - but it is not enough. They have 401Ks - but have lost too much in the past to fund college and retirement. They also have about $40K in CDs. I was thinking of moving the CD to something like a IUL so they would still be able to have some access to the cash in the near future.
 
I agree with both of you. They have a 529 in place - but it is not enough. They have 401Ks - but have lost too much in the past to fund college and retirement. They also have about $40K in CDs. I was thinking of moving the CD to something like a IUL so they would still be able to have some access to the cash in the near future.

You better use a vehicle that has no surrender charges and high cash value. Even still, I doubt the growth will make up for the charges between now and 18. Also, your commission is going to be next to nothing.
 
There's always student loans...I don't see this ending well for you if they buy a life insurance policy for this purpose. Just my opinion.
 
There's always student loans...I don't see this ending well for you if they buy a life insurance policy for this purpose. Just my opinion.

Follow this advice. The only life policy that might work is a VUL with no surrender charges if we have 50% returns for two years running. But that VUL could just as easily do negative 50% and destroy the cash.

Tell them to keep sticking the money in CDs and move on.
 
Tell them to keep sticking the money in CDs and move on.

Pretty much. No real options here; if you wanted to take on risk you could throw the CD money into a brokerage account and try to shoot for 30% returns.... thats pretty much just a pipe dream though...


One option that has not been discussed is taking out a loan to pay for college; then using some type of financial instrument to help make the loan payments, this way you have a chance at getting some interest arbitrage.
A heavily funded UL or HECV WL might work for that. (it would be pretty tight though)
A basket of high quality bond funds might work as well.
If the parents will be over 59 1/2 by the time they have to start payments on the loan then you could look at a VA with an income rider, or a FIA
 
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