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What is a better vehicle for saving for my child's education costs: a whole life insurance policy or a 529 plan?

I'm considering the possibility of using whole life insurance for two purposes. I want to protect my family with life insurance, and I want to start saving early for college costs for my 3-year-old son. My other option for college savings is to open a 529 plan. What will happen if he does not go to college? 

Financial Planning, Insurance, Life Insurance
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February 2018

Of the options here, for most I would choose neither. 

Life insurance is better used as insurance than as an investment. If you don't have a permanent insurance need (and most don't) then what you need is low-cost term insurance. 

For further thoughts on the problems with a 529 today, see my article here on Investopedia. 

For most, I look first at if we are taking advantage of workplace plans. Then, IRA and specifically Roth IRA opportunities. For just about all, this is a better option for saving with the possibility of using for college. 

Most also do not consider along with the increasing costs, there is a declining value of traditional colleges and technology possibly changing options in the future. As that happens states will try to prop up the system (by offering free colleges to those who did NOT save to a 529). We see it happening already today in states like New York. 

Along with that, you have increasing income that you will be able to use cash flow to assist. And, let's say your income does not increase - is your money today better saved for your retirement and not relying on your children in retirement, or by saving for 15 years for a goal that may not even exist in 15 years due to his choices or lower cost options.  

The next 18 years will bring significant changes to college and education. Wrapping up your money in an insurance contract or state-run 529 plan that you have very little control over may not be your best move. These are tools that could have value. I don't work with those though that these are among the first places that I would consider. 

February 2018
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February 2018