Whole Life Insurance or 529 Plans - The Choice for Funding a College Education

Whole life insurance is the workhorse of the insurance industry. It is designed to be in force throughout the life of the policyholder with the premium never changing.

It has often been compared to buying a home with a 30 year fixed rate mortgage where your monthly note containing your principal and interest never change throughout the life of the mortgage all the while your home equity is building up. 

Similarly, all the while your whole life policy is in force, your cash value is building up tax-free.

529 plans are best described as a way for parents to save money for tuition in a tax-deferred account. The state income tax break together with not having to pay federal income tax on your earnings have made these financial instruments attractive to some parents and grandparents.

Know the 529 Tax Deductions
However, given this current economic climate, some states may begin to restrict qualifications for the tax breaks by limiting the amount that you can claim as a tax deduction. 

You need to closely monitor the tax laws relative to this issue in your state. In addition, with returns on managed funds and FDIC insured plans being historically low, you simply may not get the value that you were promised.

The Difference Between a Whole Life Plan and a 529 Plan
Now contrast a whole life insurance plan with a 529 plan. As earlier mentioned, the growth in the cash value feature of the whole life insurance plan is guaranteed and builds up tax-free. 

And, because it is in the private sector, it is not subject to the whims of the politicians who not only decide who manages your funds but also how much you can declare as a tax deduction.

But, even more importantly, it must be emphasized that permanent whole life insurance is an asset that is guaranteed to grow each year as long as you continue to pay your premiums. It is not a commodity purchase with fluctuating returns.

529 Plans Can Lose Value
While many assets lost as much as 50% during the recessionary period, permanent whole life insurance has continued to grow. Therefore, in choosing a whole life plan, choose the largest face amount that you can afford. For unlike a 529 plan, a whole life insurance plan is self completing if you should die before your children are old enough to begin college. 

And, if you become seriously ill or disabled, with waiver of premium as a part of your policy, your premium will be paid for you.

So in choosing a permanent whole life insurance plan, you have a guaranteed, tax-free cash buildup, a face amount that would be paid to your beneficiaries if you should experience a premature death, and, if you become seriously ill or disabled the company would pay your premiums for you.


Which choice gives you the greatest piece of mind? Leave your comments below. Also, if you are in Illinois, call (773) 614-3201 for help in choosing the best Whole Life plan for you needs.

Stop Renting. Here's 7 Ways Get an Affordable Home

According to the Department of Housing and Urban Development, the general accepted definition of affordable housing is for a household to pay no more than 30% of its annual income on housing.  A family that pays more than 30% of its income on housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation, and medical care. This post, however, focuses on home ownership as opposed to renting and will offer an overview on owning affordable housing while not having to pay no more than 30 per cent of your annual income for it.  In acquiring affordable housing and building equity, it depends on you and not on the mortgage lender. Here are 7 ways in which you can acquire affordable housing with a minimum down payment if you qualify for mortgage or how to do it if you don't qualify for a mortgage.  The ways to acquire affordable housing are as follows:   county down payment assistance,   city down payment assistance,   lease with an option to buy,   contract for deed,   owner will carry,   not-for-profit grant money,   and, a wraparound mortgage. Each of the seven ways represent a viable strategy for acquiring affordable housing whether you are going for a mortgage or not and should be looked into and discussed with a trusted adviser in detail. Remember. as a homeowner, you own equity and an appreciating asset; you have have peace and privacy; and, you have an estate that can be inherited by your survivors.  For a free consultation on homeownership, call (773) 614-3201

5 Ways You Can Save Money on Medicare Prescription Drugs

Medication costs can make up a large part of your budget, but a few tips on saving money can easily save you hundreds of dollars a year. 

The biggest single cost-saver? Picking the right Medicare plan.

Whether you are preparing to change your Medicare plan, or signing up for Medicare for the first time, you will want to make a careful selection so you don't end up spending more than you need to.

Asking your doctors a few key questions—such as, Is there a generic?—can save you a bundle more. 

Here are 5 tips you can save money on your prescription drugs:

1. Focus on choosing the right drug plan, which depends in part on which drugs you take.
The majority of seniors are enrolled under original Medicare, which includes hospital insurance (known as Medicare Part A) and medical insurance (Medicare Part B).

Getting drug coverage requires one of two additional extra steps. Seniors can either get drug benefits via a private plan regulated by the government, under what's called Medicare Part D, or they can get drug coverage bundled with a private Medicare Advantage plan. 

The alternative is a Medicare Advantage plan, also called Medicare Part C, which replaces original Medicare and often providesprescription-drug coverage as well. 

It is essentially a way to get Medicare A, B, and D all lumped into one. Medicare beneficiaries can enroll in Medicare Advantage to receive their benefits in a private health plan, such as a health maintenance organization (HMO).

You need to  evaluate on an individual basis which is your the best option. Depending on your prescriptions and other health care needs, Medicare Advantage may or may not be better for you than original Medicare.

2. Have Drugs Delivered.
For medications you take regularly for a chronic condition, opt for the convenience and potential cost-savings of mail-order. In addition to sparing you unnecessary trips to the pharmacy, mail-ordering can sometimes include a 90-day supply at a reduced cost, depending on your insurance company and what kind of meds you need.

Once you enroll in an insurance plan you should be able to go that insurer's website to order your prescriptions delivered, or you can do it over the phone.

Be sure to ask your doctor whether he or she needs to sign off on a 90-day supply. And take care to order refills before you need them so there isn't a gap of time when you don't have any pills.

Also beware of illegal pharmacies on the Internet, which can pose a serious danger by sending you fake or incorrect prescriptions. Legitimate pharmacies will ask for a faxed prescription from a licensed doctor and a detailed medical history. They will also clearly state their payment, privacy, and shipping fees, according to FBI warnings.

3. Go Generic.
Ask your doctor if this is an option. The brand-name version of the drug you take is significantly more expensive than the generic form, if one is available.For example, simvastatin is the generic version of the drug Zocor, which is prescribed to control elevated cholesterol. Thirty 40mg tablets of the brand version of the drug may cost between $88.90 and $113.20 a month, while the generic equivalent can go as low as $15 a month.

4. Double the Dosage, and Split the Pill. 
Sometimes pills that are double the dose of your medication cost the same as a single dose, and can easily be cut in half. For instance, if your doctor says you need a 10 mg dose of a particular drug each day, ask him or her whether your medication comes in doses of 20 mg and if they can safely be split in half.

Many drugs used to treat high blood pressure and depression can be split, as can all cholesterol-lowering drugs known as statins.

5. Enroll on Time.
The open enrollment period for Medicare is from October 15 to December 7, with changes taking effect January 1. You can enroll for the first time when you turn 65, and there are also Special Enrollment Periods for when you move or become eligible for Medicaid.

  

Though Medicare drug coverage is considered voluntary, you must be getting drug coverage from another source that is at least as good as the offerings through the federal government. If you do not, you can face a penalty fee that grows each month you delay enrollment.

If you are receiving another form of drug coverage, you may actually end up spending more if you sign up with Medicare. This applies to members of the Federal Employee Health Benefits Program, TRICARE (military health benefits), and Veterans Affairs. 

If you are an active worker on an employer plan, you will want to talk to your human resources department to make sure you understand all of your options.

If you have questions regarding your Medicare benefits, email me at 
Ask Will, bwillbar@gmail.com or call (773) 614-3201.