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Greetings, donolson, and welcome.

<<Well, here goes. In 1985 I purchased a "Flexible Premium Variable Life Insurance" contract from the Equitable. Been piling money into it ever since, but mostly in the past 6 years or so. After reading Dave and Tom's first book, I began to ask questions regarding costs (2% plus 6 bucks per deposit; figures to be about 2.5% per year), returns after insurance costs and "other charges" are deducted (I'm still waiting for an answer to that one), and others. Regarding costs, my agent replied, "that's no higher than a load mutual fund", and "that's how I get paid". My next question needs to be, what are you doing for me to earn that? I see the upsides of the contract to be, tax-deferred growth, tax-free withdraws at retirement (first the cash basis, then loans which are not repaid), total liquidity, and decent investment options that seem to be expanding all the time (There is even an index fund!), and a large life insurance benefit that allows me to take a larger pension from my job as a state employee. Now, what I need is some unbiased, in your face advice on how to proceed for the next 23 years. Should I stick with this program? If not, what are the tax consequences of pulling the money out and reinvesting directly in stocks? Am I being totally taken for a ride here? The account value is $31,000. The death benefit is $450,000 (yes, I do need that much insurance) and the monthly insurance cost is $66. Thanks for any and all responses.>>

Long time readers of this folder know I abhor variable life products. Always have and always will, and that's basically because of the outrageous fees they levy as you have outlined in your post. I subscribe to the adage one should buy life insurance as just that, and NEVER as an investment. That said, I will also say in your case the damage has already been done. You encountered your highest fees and expenses in the first few years of your policy. While I find the 2.5% continuing annual fee outrageous, you also say you need the insurance coverage of $450K. The big questions then are: Can you replace that coverage at your age for $66 or less per month? If you surrender that policy, what will the charges be and how long will it take to offset those charges plus taxes on gains in other investments?

With 23 years to go, you may very well be able to do better for yourself by dumping this detestable product. Just be aware that will be a cost involved, determine how much that will be, determine how long it will take to recover those costs, and then compare with what you have now against what you will use to determine both of those values 23 years from now. Only you can do that analysis, and that's the only way you can determine what the best alternative will be for you.

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