<p>Someone advised us that purchasing cash value life insurance is a way to "invest" for college but that any monies in life insurance do not have to reported on the Profile or FAFSA. In this way you may keep your EFC lower</p>
<p>Does anyone know anything about these policies?</p>
<p>You would have to put a ton of money into a cash value policy to have enough built up by college age to make much of a difference in your available funds and taking the money out of the policy would then cause the policy ot be defunct.</p>
<p>On the other hand, it is myunderstanding that cash values in life insurance are not proclaimed anywhere on the FAFSA or Profile, so it could be an effective way to shelter "savings' from being considered by schools.</p>
<p>If you put money into a life insurance policy you have to asume 10-15 years of surrender charges before you could access all the money, so this would oly be viable if this were part of your long term financial plan for your family, not a temporary hiding place. I do know of many people who have used cash value life insurance as part of a long-term diversified financial plan, though the rules changed in about 1987 and you cannot be quite so "creative" these days </p>
<p>Many people feel cash values are not an effective investment, they would rather go for a big build up in real estate or the stock market- I guess that would depend on your risk-taking profile and which is most comfortable.</p>
<p>well, it never occured to me to declare the cash value of my life insurance policy on financial aid forms -- there certainly is no question specifically addressing it -- so I guess that it is one way to shelter an asset. That being said, I bought life insurance for its intended purpose: so that if anything happens to me, there will be enough funds to enable my kids to finish their educations. I look at the cash value as more of a safety net in the event of a true financial set back -- it is something that could be borrowed against or cashed out if I was desperate for money.</p>
<p>In any case, I purchased my policy when my kids were very young and after 15-20 years of paying in, there isn't all that much cash value built up. I think I would have more if I had paid the same amount as a monthly deposit to a savings or investment account. It seems to me that a 529 account makes a lot more sense for college savings.</p>