College education and endowment policy
In all honesty, I don’t trust myself never to touch any savings I start for my youngster’s college education. Isn’t an endowment policy the answer for someone like me?
answer:
Frankly, endowment policies are hardly the answer for anyone. The big sell will have you believe that they are great for education planning (it’s that “forced savings” sales talk again), but be wary. Remember that an endowment is simply an ordinary life insurance policy that you pay off in a fixed period, usually 15 or 20 years. Even if you start a 20-year endowment when the first squall comes from the cradle, you won’t have cash-in-hand at the start of college. It’s an expensive way to save, too, because interest rates are among the lowest there are, and premiums are comparatively high. Endowment policies also give scanty life insurance protection.
If you still resort to insurance “forced savings”, it makes sense to add an “endorsement” to your policy for a small additional charge. Then, if you die or become too disabled to work, the cash value won’t be lost. You won’t have to pay any more premiums, but your beneficiary will still collect when the policy comes due.