To The Editor:

I am writing regarding the article, “The VUL Option For College Funding Might Be Right For Your Clients,” in the Aug. 25 edition of National Underwriter.

The primary purposes of life insurance are: economic protection, business planning, estate planning, wealth transfer or philanthropic desire. In my view, a strong case cannot be made for using life insurance as a college funding mechanism, for the following reasons:

1. Costs of insurance.

2. Insurability issues.

3. Financial aid issues vs. 529 plans (the statement that 529 plan assets are “not excludable for financial aid purposes” is incorrect).

4. Tax benefits vs. funding alternatives (ESA, 529, Gifting).

5. State laws related to life insurance on children (which is accurately pointed out).

6. Death benefit cannot be counted on when the child is enrolled in college because death of insured may not be imminent.

Also, it is possible that favorable tax laws relating to life insurance may change in the future, as is the case with any tax-favored vehicle.

Thanks for the article.

Robert J. Kuehl, CFP


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.