Do you recommend a Variable Universal Life Plan (VUL)?

Question

Our Financial Advisor recommends this plan. I am 36 yrs old and Married, we are in a high income bracket.

Are the excessive fees? Are they Risky?

Answer 1

No. No. No.

The only reason they love those is because they make a great commission.  If you are in need of insurance, you are better off with a term life policy.

If you have extra income, you are better off putting it into your retirement up to the match or paying down debt.

Answer 2

NO NO NO NO NO!

Buy level term life insurance and invest the difference.  Insurance is not an investment.  Don't let the waters get muddied.

Answer 3

Absolutely, positively ... maybe.  IF you have maxed out your retirement plans at work (such as 401-K or 403-B plans) AND maxed out your own IRAs AND you have a real need for life insurance AND are looking for more ways to defer taxes on investment growth, a VUL plan may be worth looking at.  However it's impossible to evaluate your particular plan in a forum such as this.  Your question indicates you're already feeling a little nervous about the fees, so that's a red flag in itself.  You need to research comparable products to see how the one you are considering compares.  They are risky to the extent that the cash values are invested in "sub-accounts" (you choose from a menu) that mimic the whole range of investment choices -- from conservative money markets to aggressive growth stocks.

Answer 4

Cash value is rarely ever a good product.  Especially Variable Universal Life.  It offers the highest commissions with the highest surrender charges.

If all you want is life insurance, stick with Term.  If looking for tax savings, max out any investments you have (401k's, IRA's, SEP's, etc.).  Combined for a married couple you should be able to shelter around 100k a year in those.  If you have kids, you could potentially save even more with child IRA's.  Gift's could also prove useful.

In other words, find another adviser/analyst that has your interests at heart instead of their own pocket books.

Answer 5

it is very good plan for more information and comparing search on any site

Answer 6

Only if you have already max'd out any other method of retirement savings [401(k), IRA or Roth IRA, etc.].  If you have the incentive to learn investing yourself, you may do better with term insurance and your own investments (even if taxable).

Answer 7

I own one....two actually.  And I own term for the bulk of the coverage I need.

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