FAFSA Online Secret: Ensure You Are Insured (Life Insurance)
Generally, whole life insurance can have a poor rate of return on investment compared to other investments. There is, however, one scenario where whole life insurance is a better investment than others - when you are filing the FAFSA application.
The FAFSA calculations for your EFC exclude:
- The mortgage on your principal residence
- Retirement plans
- Prepaid tuition plans
- The value of life insurance
A whole life insurance plan is essentially invisible to the federal financial aid process. The downside to whole life insurance? It's expensive. It does, however, provide a modest return on investment in the very, very long term (think 20-30 years) and gives you coverage in case something unexpected happens. Investing in the whole life insurance plan gives you another place to sink some money away from the prying eyes of the financial aid process.
Look around for a decent life insurance plan that works with what you can afford.