Hi Christine, I know Dave is a well respected advisor on these boards, but I have to say I have always been told to steer clear of anything other than Term Life. Thanks... uhh, I think? Hopefully I'm not losing any respect from the lack of financial planning experience from whoever 'always' told you to steer clear of anything other than Term Life. Many people here have also "always" been told to pay off their mortgage as fast as possible, "period," regardless of the risks & harm it can create too. What many have "always" heard is not always so valid. Dave perhaps you could clarify why Universal Life is a good option in general and also specifically in this case? I have been on this site off and on for a very long time, however, I have not read that many posts on this particilar board to know your general philosophy on this. Sure. FIRST off, it is most likely the case that "everyone" who "always" advised you to avoid anything but "term" was specifically talking about buying life insurance for the purpose of the insurance DEATH benefits... not the financial planning features available within certain types of it. For the best death benefits "bang for the buck"... Term life premiums are state regulated, so for the most part you pay for the benefit coverage you get, and nothing more, regardless of the carrier (which is GOOD if what you want is a payoff at death.) Differences in term life premiums are generally quite small, and when one carrier appears to be "cheaper" per $1,000 of benefit than another (i.e. if you Google for 'cheapest term insurance' etc.) its generally because that carrier has less capital reserves to protect its policy-holders, thus less costs... and is thus more at risk of being illiquid... *OR* it fights harder NOT to pay all of the benefits expected when its policies mature, and thereby it has less costs of fulfillment. There are OTHER very important financial benefits to life insurance contracts, however, OTHER than the ultimate payoff of a death benefit at policy maturity. Congress has written legal "tax-shelter" features into the IRS code such that cash values sheltered within properly structured life insurance contracts grow and are harvestable UN-TAXED. Universal Life *IS* a term life policy (underwritten through age 100,) that offers a SEPERATE (un-comingled) cash accumulation account with the unique tax sheltered benefits only available inside cash-value life contracts. (NOTE that this is distictively different from old-fashioned "whole life" contracts that inseperably comingle insurance costs with their cash-values.) For FINANCIAL PLANNING purposes we want the maximum shelter benefits with the LEAST actual insurance coverage we can get away with (since, for this particular purpose, we don't care about death benefits.) The cash account within a Universal policy is allowed to grow tax free (no annual capital gains nor income taxes,) and is allowed to be accessed for spending tax free (via zero-interest policy "loans" which have no repayment requirement until the policy "matures"... aka when the insured dies.) Our OP is concerned about college tuition fund planning. The general strategy with college funding is to take advantage of *ALL* external funding resources (public assistance, grants, loans, and public/private scholarships) *BEFORE* dipping into the family-accumulated funds. THe catch-22 is that *MANY* external funding sources are "means tested." This means that they look at the student's fmaily's financial profile 1st... and if the family has funds in reserves, the external sources DEDUCT those from the support calculations (in essence saying "you guys drain your OWN accounts before we'll offer you any support!") Of course, this is completely contrary to the idea of rewarding those who are responsible... which is the whole point of using Universal Life insurance contracts to accumulate college tuition (and subsequently retirement funding for the parents.) Universal Life policies can also be "owned" by someone other than the person that the policy is insuring (the "insured.") The owner can be grandparents, uncles/aunts, god-parents, seperate trusts, or simply trusted friends. Because the ownership of this accumulation asset can be legally seperated from the student's family balance sheet, the student's family does NOT have to drain all of their own reserves before taking advantage of external educational support resources. PERSONALLY (and professionally,) in regards to actual death benefits... I would probably almost "always" harmonize with whoever else was "always" telling you to avoid anything other than term life. For death benefits (replacement of a parent's income for family support, most commonly,) term is generally the best way to go. For FINANCIAL PLANNING, however... age-100 term life coupled with cash values (in the form of Universal Life,) can be a very sharp strategy from both the tax-shelter perspective, and the avoidance of means-testing punishment of the more financially responsbile. Cheers, Dave Donhoff Leverage Planner

I found that, though I can have certificates issued for mutual fund ownership (no fee), or stocks (about $35. each), I cannot have a stock certificAte issued for an Exchange-Traded Fund (ETF) in Canada. Which means that I cannot use the evidence of ownership of an ETF as security to arrange a line of credit or loan with my bank/credit union, at low rate of interest. I can use it as collateral with the stockbroker who holds the fund, as well as others of my assets, in his electronic data base ... but my experience has usually been that the stockbroker usually charges at least 1% higher rate than at the bank, which is an appreciable difference, when compounded over time. Sometimes I have little asset easily available as ready cash, or that I choose to liquidate now to make available as money in case of an emergency, as I may not like the price available, or the sales commission required. As I sometimes lack available ready-cash, I have a fully-secured Line of Credit, backed by certificates of stocks and mutual funds, to obtain a low rate of interest - currently about 6.25%, but unused at the moment. Then I can use a credit card in an emergency, then use my line of credit to pay off that amount in full before it starts accruing interest, unless the credit card carries 0% rate, which is not the case, as I have had my card for several years. The trouble is that the interest paid on a loan used for an emergency or consumption is almost always not deductible and I prefer to use loans for investment, thus making them deductible. So when I use an emergency loan for emergency, which is seldom deductible, I stop investing for a while and use that part of current income to pay off that non-deductible-interest loan as quickly as possible. Then I start using that regular saving to begin investing again, plus may borrow to invest, if I feel that the situation justifies it. Also, in my Canadian situation most of the time, I can borrow for investing at almost no net cost. Are you familiar with the Rule of 72? Divide 72 by the rate of gain/growth that you are getting and the result will show you the number of years that it will take for your investment to double. Thus, investment return of 6% will double in 12 years ... at 9% will double in 8 years. But it's not the raw figure that counts. If your bond pays 5% and you are in 20% tax bracket, that means that 1% is lost to tax, so your after-tax rate of return is actually 4%. But when your bond matures, you'll get back only the number of dollars invested originally, so those equal-value dollars suffer annual erosion of value due to inflation. If you assume inflation to be 3%, that leaves your effective rate of return at only 1%. Which means that it'll take 72 years for my $1.00 current return on invested asset to become $2.00. I bought a long-term quality Canadian stock 40 years ago for $4.20, that paid me about a dime or so a year in dividend, which is tax-advantaged here. Over the years, it's paid about 3% or so, or about 2.5% after taxes. A few months ago I could have sold that stock for $107.+ per share, and a few months later for about $89.50, and since it recovered to about $101.00, then last Friday dropped to about $96.50. Did I choose ot sell it? Not on your life! It has grown well for me over the years, and is currently a high quality stock. As the stock has grown well over the years, you can see my reasoning when I say that I do not feel the need to make any calculated deduction from current dividend rate to allow for the erosion of value of the basic investment due to inflation. Current after-tax income of 2.5%, divided into 72, shows that those dividends reinvested will double in about 30 years ... to my mind, a lot better than taking 72 years to do it. When I calculated the rate of growth of the stock a while ago, I think that I calculated that to be about 7% compounded. So you can see my reasons for being happy with that investment. That's one of my better ones - one of my equity-based mutual funds has taken over 20 years to slightly more than double. I'm not very pleased with the folks who have managed it over the years - and they've changed several times. Good wishes as you pursue your savings and investment program. ole joyful

We went through the process last year. Basically you need to look at your own state's plans first. Do they tax your 529 plan? Are the funds your state offers any good? Do they have high fees? Some times there are advantages to staying with your own state's plan. However, if your state's plan isn't that good, or they don't offer any tax benefit, then you may want to consider another state's plan. When we where looking I think Virginia, Utah and Alaska were ranked the best performers. At the time, our state didn't really offer any tax advantages (most funds aren't federally taxed, but some states still tax your funds) and the fees seemed much higher than other state plans. We went with the VA plans b/c they were the best suited for us. There are many websites out there that rank the 529's and try and give you enough info to make your own decision. No one will actually tell you what is best for you though. Bummer! Good luck.

I'm in an Ivy League school, and I've been through all of the financial aid stuff, and just be warned that if you have enough money to cover 4 or more years of it, the school will take as much as they can, and you probably won't get any kind of financial aid outside of merit based scholarships which Ivy League doesn't give out anyway. My family makes about $50,000 a year and my parents didn't save any money at all for my college and I'm paying $1,200 a year to go (the price is $37,000 a year)with grants. I don't know anything about this plan and I think it's wonderful that you want to save up a lot of money for college but you will spend a good chunk if you do. Maybe that's what you want to do, in which case, ignore what i'm saying. At the very least, put it in the parent's name solely. Ivy League and other schools take 35% of child's money and property (savings bonds, stock, even cd's) and 5% of parents. I've just seen so many friends who are paying huge price tags for school because grandparents or parents have saved up for years and years. Since this is a toddler's forum, you still have a while yet =) My recommendation would be once the child is old enough to go to college, put all of the money into a bank account under an aunt, uncle or grandparent's name so it can't be claimed as parent or child property ($150,000 makes a HUGE difference in finacial aid) and then file for financial aid and see what kind of loans and grants and scholarships you can get. Loans don't start gathering interest until 6 months after graduation, at which point you can pay off the loans and still have a pretty little chunk of money for the parents retirement or a new house or something. Just my two cents. I would hate to see people who mean well lose all their hard earned money when these schools are so well endowed themselves. Again, I really don't know anything about the topic of this discussion but I just cringed seeing the amounts people might put away a month.