Anyone have some thoughts on pros and cons of this? Better to invest in an IRA first?
Anyone have some thoughts on pros and cons of this? Better to invest in an IRA first? In short, keep your term policy, invest the dif in an IRA or (ehem) Mutual Fund. You will get more, pay less and earn higher interest on invested dollars. rec
VUL is indicated in some cases for tax planning purposes, but in many cases, the extra fees that they hit you with are higher than the taxes you'd pay if you just invested in a taxable account! (Somebody has to pay the salesman's commission and that somebody is you.)This question is often asked on the "Insurance" board.
I don't think life insurance should ever be bought solely as an investment. I have had a lot of experience in helping people who have policies that have turned out to be dogs. IMO you should purchase life insurance only to (1) meet a need in the event you die prematurely, or to (2)provide funds to pay estate taxes. To meet number 1, term insurance usually is much cheaper. If estate taxes are a problem, you will need permanent life insurance, and there are a number of sophisticated methods using life insurance to meet estate tax needs. Of course, estate taxes are scheduled to leave us forever, but don't bet on it.Variable universal life is permanent insurance. The investment element of variable universal life sounds good. But on a universal life policy, no insurance company that I know will guarantee either the level of the expense charge that you will pay or the mortality rate that you will be charged. If you carefully read the contract and illustrations furnished, you will see that the guaranteed results are terrible. And always ask to see a sample of the contract before buying (they will not give you one unless you ask). Variable whole life is much better than variable universal if anyone still sells it. So, I don't know your needs and can't give you any advice, but the average person should buy term insurance and do their investing in the IRA.
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