Variable Universal Life - Wise Investment Choice?

[CubsFan23]

Hello. This is my first post! After I've maxed out my annual Roth IRA, I've heard of investing through VULs. Can anyone explain how this works and if it's a wise choice? Pros/Cons, etc? Thanks!

[sweeps]

Can anyone explain how this works

You hand over a lot of money in commissions and fees to a insurance salesman just to buy an investment that usually underperforms what you can do investing on your own.

a wise choice?

No, not a wise choice at all.

[BTC]

Are you getting this advice from Ameriprise Financial, formerly American Express Financial Advisors?

[tripods68]

Variable Life Insurance

PRO
- it combines life insurance + savings yielding
-Cash Value earn usually around 2-5%

Cons
-High Premium Cost
-High affordability on $500K coverage compared to Term Insurance
-Higher coverage cost more
-High Fees front cost
-Low savings rate


I recommend Term Insurance instead 10, 20, or 30 fixed level term. Buy term and invest the difference towards EF, ROTH, or 401(k). This is much better options all the way.

[poundwise]

Walter Updegrave: Money Magazine/CNN Money -

Thinking twice about variable universal life

When an adviser pitches universal life

Variable universal life: The Pitch, The pitfalls


Suze Orman: Money Matters -

Insurance: What You Need and What You Don't


Dave Ramsey -

The Truth About Life Insurance


The Finance Buff: Blog -

$10,000 Lesson On Variable Universal Life (VUL)

[CubsFan23]

I'm getting the advice from an insurance salesman...that's why I needed to ask everyone here: to get an honest answer! Thanks for all the links!

[Ima saver]

No, it is not a wise choice! Stay away from insurance salesmen! They are out to make a commission, not do what is in your best interest!

[Aleta]

You can go to Select Quote which is a reputable company online and they will give you quotes from different companies for any insurance product that you want. We had universal life and it was a big mistake and even lost some money getting out of it. It's better for you to get term life insurance and invest the rest of what universal would have cost you. That's what we did and we are happy that we made that decision. Univesal life is expensive plus the insurance salesman gets a nice commission for selling it to you.

[disneysteve]

As everyone has said, stay far away from variable universal life policies. Keep your investments and your insurance separate. If you need life insurance, buy renewable and convertible term insurance. That gets you the most bang for your buck.

Stay away from insurance salesmen! They are out to make a commission, not do what is in your best interest!

I think this is too broad a statement, Ima. Not all salespeople are con men waiting to take advantage of the next person who walks through the door. While it is true that in today's world, you can buy your insurance from home on the internet without ever speaking to a human being, a good insurance guy or gal can be well worth the commission they collect.

I've dealt with my agency for nearly 20 years. The first agent was wonderful and, unfortunately, died of cancer a number of years ago. She would meet me at work when I was still a resident working crazy hours to go over my policies. Later, she would come to the house to discuss things with my wife and I. Now, the guy who took over her accounts does the same. I've never felt pressured by him and have found him to be a great source of information regarding insurance. I'm well aware that he works on a commission basis, but I've always found his answers to my questions to be fair and balanced. Sometimes he has recommended products from his own company. Other times he has recommended products from other companies, admitting that they offered a better deal.

He (and she before) also will run a pretty detailed financial planning review for me every few years that looks at where we are with respect to retirement planning, college savings and insurance if either of us were to die. And this is done at no cost at all. I've had it done about every 5 years and it has served as a very good tool to guide our planning.