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<p>Keep it simple. If you want to insure someone’s life it should be because you want to replace something that will go away if that person should die. Usually that something is a salary. How much longer will the person to be insured be working and how much insurance will you need to replace a lost income? Buy the cheapest term policy you can find and make the term end at the point at which you will no longer need to replace an income. Make the benefit size the amount of money you will need to replace if the income goes away.</p>
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<p>Yes, I think that this is one of those cases where simpler is better. Annuities and life insurance as investments are complicated, and those that sell them must baffle prospective clients with their BS in order to hide the fact that sales commissions and fees mean less return on investment as compared to more straightforward investments.</p>
<p>You have run the numbers through NPCs, you say, and there is a difference in what you are expected to pay from some of the schools on your student’s list, when you put the assets into a 403B. However, if you put the money into the 403B, you then may not be able to pay for the school costs even at the lower costs. So do figure out what the gaps are between these estimated costs and what you can afford to pay. Can you borrow the money and pay it back, say from your 403B and PLUS loans? The interest on PLUS is about 7%+. I believe. You can start repayment immediately and use the loan as a way to stretch out 4 years of payments into 14 years, which is what we did with our first child. I can tell you it is painful and 14 years is a long time. If you can cover the first two years of college and not borrow till then, you can save quite a bit in interest. </p>
<p>If you withdraw funds from a ROTH IRA, though it is not a taxable transaction other than for the earnings on it, and no penalties from the IRS, colleges will consider that withdrawal as income the next year, so that is not a good idea except to pay for senior year costs. </p>
<p>Also make sure you contact each financial aid office of the schools your student is considering and ask how retirement account assets like IRAs, 403B, etcs are considered. I would not trust the NPC in this regard and would double check. Many schools do not consider these accounts unless certain factors are present and the NPC might not be calibrated for those things, as they may be considered rare. </p>