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Subject:  Re: Variable Univ. Life Ins? Date:  8/8/1997  11:52 AM
Author:  TMFPixy Number:  168 of 88026

Greetings, West, and welcome to Fooldom.

<<I'm being propositioned by a Variable Universal Life Insurance company
and they're telling me along with the untaxable compounding in stocks I can also withdraw money when I'm older (it's a 'wash loan?' that supposedly counters any interest charges) tax free as well. Not to mention the ability to put in more than $2000/yr (i.e. IRA).

This sounds too good, what's up? Anyone?

(PS. My own research shows that they only deal in mutual funds within the account and they charge an awful lot for the service--> $60 annual + 2% or $25 on all withdrawals whichever is lower.... I'm still researching it. My studies have also turned me towards something called Variable Annuity...

Any of this stuff useful to a 22yo?)>>

Pixy's motto is buy insurance for insurance, and never as an investment. They rank among the poorest of the world because of the fees, admin charges and commissions associated with them. As to a VUL policy, studies show that just to equal the average equity mutual fund's lackluster performance, the owner has to hold the policy for 15 or more years. One of the dirty little secrets of the insurance policy is that few policies remain in force after the 10th year. The same goes for annuities IMO. You can do much better for yourself in something else even if the earnings are taxable.

Consider these products only if you need the coverage; only if you have maxed out any 401k option you have; and only if you have contributed the max to an IRA (whether deductible or not) for the year. Otherwise, skip them.

Just one Fool's opinion FWIW.

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