Can anyone give me some insight on using an universal variable life insurance plan as a secondary(after 401K) retirement investment vehicle? From what I can tell, it looks basically like a Roth IRA except it has the added benefit of life insurance along with it, there is no yearly maximum, and there are no penalties when withdrawing what I have put it. I even get to choose from a list which mutual funds my money will be invested in. I am a beginner with this type of thing and I am open for any and all opinions on if this is a good thing to do. If not, please inform me of what would be the best way to invest now for retirement. I am only 23 years old, so I have a long way to go. I was thinking about Roth IRAs and mutual funds until now, but I don't know which funds would be the best to go with. Thanks for the help.
Are you married or do you have dependants whom you support? If the answer is No, then you do not need life insurance of any kind. If the answer is Yes, then you probably want term insurance. This provides no cash buildup, but it is much, much cheaper than whole life. You can invest the difference in the premiums and almost certainly do a lot better than the insurance companies will do for you.For term insurance, Savings Bank Life Insurance seems to be a good buy. At least that's what colleagues say; I am single and do not need life insurance.The Fool has an Insurance board; you should look there.But, in any event, life insurance is not an investment, any more than car insurance is. It's a hedge against a bad circumstance. The rest of what the insurance agent might tell you is mere window-dressing.
Justin: There is an Insurance Board within the Managing your Finances section of TMF where this discussion has been had several times. You may wish to re-post there, or youcould simply search that board for VUL, universal life, variable life, etc.Consensus, seems to be to make sure that you need the insurance and consider only after maxing out all other tax deferred investment vehicles - 401k and IRA, in particular, and not to overlook paying off debt and and savings for other expected needs, like house, car, marriage, kids, etc., as applicable to your situation, because VUL probably needs to be maintained for 10+ or maybe even 15+ years to overcome additional expenses involved. But I am certainly no expert..Regards, JAFO
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