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Author: TTRoberts Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76112  
Subject: Re: To invest in VUL or not? Date: 9/25/2000 12:08 AM
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kshouser, you asked:

<< An acquaintance with Northwestern Mutual Life has been pushing my husband to invest in a VUL - variable universal life policy. We're both 40 - and he works for a Fortune 500 company with a good matching plan, pension, etc.. He already has a $1 million life ins. policy (term) - $93.00/month.

Is it worth it, (he suggests investing $2,000/monthly) - for tax benefits alone??
>>

The answer is . . . . it DEPENDS. It can work out very well . . . or it can work out very badly. It depends on just how, specifically, the particular policy is used within a comprehensive insurance and investment plan.

<< Do you think this amount of money would be better spent paying off our home or investing elsewhere? Please advise. >>

Any advice on a question like this without knowing specific details or your finances as well as your short term and long term objectives would be VERY inappropriate. Advice at this point won't even be worth the 2 cents anyone might try to throw in. ;-)

<< What are the pros/cons of this investment vehicle?? Thank you!! >>

Again, it all DEPENDS. It's simply a financial tool and just how you intend to use it or incorporate it into your comprehensive plan will determine what the pros and cons will be.

I would suggest that your first ask your acquaintance (I assume an agent for Northwestern Mutual) the following and very specific questions: Is the policy being suggest really a Variable Universal Life contract or some other form of Variable Life contract? If not, what is the difference. Can you “over-fund” the policy? Can you actually make “withdrawals” at any time (not loans)?

The reason I suggest these questions are so you can clarify just what type of variable contract is being proposed. The variable type policy that Northwestern has had is NOT a VUL. But they may have come out with a new product recently that acts much “like” a VUL. So, you're going to need to find this kind of thing out to see just what the pros and cons are.
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