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Originally Posted by Cynthetiq
But that's the thing, it doesn't have to be for education. Jazz can use 529s which I think is equal to RESPs. But my point is that once you've maxed out on all the things you can use, and this option is left. It is hard to shed all the negative ideas and press about not using whole life insurance as any kind of investment vehicle.
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It is hard to shed it all, which is why I admitted that I would use it as a vehicle if I were wealthy, which I'm not. Whole life can be used for certain tax strategies, but these are usually only possible if you have a lot of money. You'd have to be damned wealthy to have maxed out your other options.
Whole life can be expensive, and also realize that the insurance industry isn't driven by consumers, it's driven by salespeople. It attracts some of the most hardest core salespeople out there, because not many people like to think about life insurance, even if it's for their own good. Insurance sales is usually high commission, which means reps aren't always taking what's best for the consumer in mind. Yes, this might even be worse than stand-alone mutual fund managers. But I won't get started on MERs.
If you weigh your options entirely, and you understand how the full spectrum of financial products works, whole life is an option that seems easy and favourable, but once you do the math, there are better options out there. I have term life insurance because I want to pay for the coverage I need, rather than coverage and some other stuff that an insurance rep sells to me that has little to do with direct insurance on my life. I'd rather have more control over my money, and I certainly would like to know what it's doing.
In any investment plan, you want to maximize your capital, minimize your commissions and fees, and maximize your returns. Whole life investments don't stand up very well as a comparison to other methods, especially if you don't have much capital to move around.