0xf001, you asked:<< First a little background, my wife and I are both 26, no “bad debt”, very decent salaries, have a house (paying a mortgage), no kids (but plans), and trying to figure out how to retire at 45Retirement planning seemed to be somewhat overwhelming at first and we hadn't done much to get it going (besides maxing out my employer matched 401k contributions). So when given an offer to go see a financial advisor we took it; hoping that he could steer us in the right direction.So we gave him all our financial information and he got back to us, with a nicely bound professional looking “financial plan” that showed which AMEX funds are right for me. He then started telling us that our “Age and financial status gives us a unique opportunity to invest in a very special tax-advantaged vehicle, a Variable Universal Life Insurance plan.” We were so entranced by the sales pitch I almost handed over a check and signed the paperwork. But after a few questions and a “what? you don't trust me?” statement we decided to sleep on it. >>Excellent decision! As compelling as it may be to start something NOW, it prudent to take time when deciding on a course of action for long-term commitments. << I have since done some digging around and it seems our “unique opportunity” isn't so unique, since this seems to be the standard AMEX sales pitch, and it seems opinions are generally negative of it. >>While I'm not suggesting that this “unique opportunity” has any good or appropriate value in you're particular case, I would point out that most of the generally negative opinions come from a substantial lack of knowledge and understanding of such a product (even by most who sell the product) . . . and the fact that they ARE often inappropriately applied and over sold.<< So this brings me to my question. My wife's employer does not offer a retirement plan. We are planning on maxing out contributions to an IRA for her and one for me. As well as contributing the maximum employer matched amount on my 401k. If after doing this we still have money left over, is there any other tax-advantaged account my wife can contribute to since her employer doesn't offer one? Or is this VUL plan really the best choice for that money? Or just put the money on a brokerage account, take the tax hit, and use one of these foolish investment strategies? >>Well . . . as was pointed out in a previous post by JAFO, you've not said ANYTHING about your needs for life insurance. The VUL "plan" is a life insurance contract. And being a life insurance contract it has costs for that life insurance. If you don't want any life insurance, then such a "plan" would have some very high costs associated with it since not only would you have the costs that revolve around the life insurance, but you'll also have costs like you have with mutual funds. So, when you have no need/want for the life insurance, this is a pretty high price to pay. Also, if you don't plan on keeping the life insurance in place for your entire lifetime and plan to surrender the policy at some point, there's a tax issues that can become a big problem too.With this said, I'll point out that these kinds of life insurance policies can indeed work well as PART of a comprehensive retirement plan. They shouldn't be used as a primary source of retirement income, but can be used as a supplementary source . . . and preferably on an if needed basis.They're a very complex type of life insurance contract. And if you're really not all that financially sophisticated and/or don't want to be, thin a variable life contract is really not a suitable contract for you. You need to understand them well so you can manage them well, as they take a lot of attention to make them work well.<< I've tried to search the forums and google for answers to these questions, but I always seem to go off on a tangent and haven't had much luck. So I figure I might as well post here… If I need to do some more research on my own, I'll gladly accept a “shut up newbie” >>It is a difficult thing to find the kind of information you need to understand with this kind of “plan” is all about. Since this “plan” is dealing with a life insurance policy and using it in a particular way, you might consider getting hold of the book titled The New Life Insurance Investment Advisor by Ben Baldwin. It's not a book really written for “advisors,” but one actually written for consumers to help them better understand life insurance contracts. I find this book an easy read for consumers wishing to understand this kind of stuff better. This book will probably answer all the questions you might have about how a VUL works and might be used in such a “plan.”
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