Which Life Insurance Policy Is Best?
There are several options available to prospective policyholders, and it's important that you understand each plan's benefits and drawbacks before making your decision.
Whole life insurance provides a 'safety net,' in the sense that the insurance company provides a guaranteed amount. You can expect anywhere between a 3% to 6% return rate after the first few years.
Variable or universal life insurance, on the other hand, is more flexible. As the policyholder, you decide on the payments and investments. That means that you can generate greater investment rewards, but you can also suffer greater investment losses.
When it's time for your child to enroll in college, you may take out a loan against your cash balance. The insurance company will decrease your death benefit if you don't pay back this loan, but that shouldn't be a concern if you primarily intend to use this policy as a form of a college savings account.