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Once their child is born, parents are often bombarded with literature and advertisements touting different methods to save for college. And with the promise of guaranteed rates of return, cash-value life insurance policies are often pushed to eager, college-planning parents.
These policies accumulate value during the policyholder’s life and then pay out upon his or her death. But policyholders can also make withdrawals or borrow against their policies during their lifetime and use the money for college expenses. Unfortunately, many parents don’t realize until later – when premiums continue to rise and erode cash accumulations, or when withdrawals become difficult – that life insurance policies aren’t the best college savings vehicles after all.
Here are three things that experts say can cause problems for those using life insurance policies to save for college.
