Shannman, you asked:<< I read you comments and the posts you suggested to explain Variable Universal Life,thanks. I too have been approached by WMA-- who by the way is launching an ISP that will "rival AOL in a year"-- very Amway. I'm not a fan of the universal policies, but I had not heard that these vehicles are a tax shelter. I can't get a straight answer from the rep and I know I'm being SOLD on the VUL and the ISP. I'm not asking you to comment on WMA. My question is can you beat the tax man well enough with a VUL to come out better than an IRA or a good buy and hold strategy? Typically, YES. It just DEPENDS on the assumptions YOU feel are reasonable. A VUL can certainly produce a net after tax income flow greater than what you can get from any comparable taxable investment + term policy(s). Other than employer matched 401(k) numbers, a Roth IRA + Term Policy(s) has an edge over the VUL as the income from the Roth is TAX FREE when taken after age 59 1/2. Yes, the VUL has high expenses due to having mutual fund like sub-account including the costs for the life insurance and any other features you decide you want. The non-taxable income stream one can generate from the policy offsets these expenses. But there are caveats to do so. Two of the main ones are; you're making policy loans to generate the non-taxable income stream so you can't EVER surrender the policy or let the policy lapse after you've done this - second, you can not use up ALL of the funds in the policy as some fund must remain to keep the policy in force. One's planning needs to take these things into consideration. This is why a VUL can be very effective as PART of a comprehensive plan and NOT one where the VUL is the sole source of income producing assets.
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