Has anyone started some kind of savings plan to fund college? We've been researching some options and can't decide what is best. A 529? Taking out life insurance and using the cash value? Has anyone decided on either of these, or something entirely different?
Thanks )
Re: saving for college
I work for an insurance company. So I can share what I know about that.
Depending on what type of policy you buy, some or all of your cash value is guaranteed. That means even if the stock market crashes you will still get your money. (As long as the insurance company is still solvent anyway!) Buying insurance now guarantees your LO the right to keep that insurance in the future, even if he/she has a serious illness later. Sometimes it even guarnatees him/her the right to buy more insurance later without undergoing any health testing/questionaires. The downfall is that life insurance with a cash value is more expensive than term insurance with out cash value. So if LO ends up not needing the cash (gets a scholarship, doesn't go to college, etc.) it will be more expensive than it would have been to just get term life insurance and put money in a 529 or a CD.
I don't know as much about 529s, but I think they are basically a glorified money market account. You contribute with post-tax money so you don't pay taxes on the gains as long as you use the money for college or other stipulated uses at the stipulated time period. I believe some states have tax benefits if you are contributing. The risk is that they are usually linked to something like the S&P 500 so you are taking the risk of the market crashing and you losing your money.
With DS1 we have both a life insurance policy and a few CDs that we've opened/rolled over through the years.
All of this exactly.
Basically all of this for us.