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you somehow take home equity out (not sure which method) and a planner (who gets paid via commissions from your account) manages the money.

Two ways to "take equity out" of a residence are to sell or to use it as collateral as a loan (e.g., a second mortgage or a home equity line of credit).

So, taking the principal from a loan against your house, someone will earn commissions (... "a planner manages the money") on managing the money.

They also said if there's an emergency, they can take money out without penalty (you're not actually taking your own money out but a loan against the money you have invested).

This sounds like VUL or some other variation of UL.

It is likely that this will have high costs, meaning lower returns than if you took out your own second mortgage and invested the principal yourself in low-cost, no-load funds or use a discount broker to invest in individual stocks, you are likely to do better.

Of course a financial planner will want you to invest as much as possible, preferably in something that generates lots of commissions--that is how the financial planner earns an income.

Now there are some things you should be aware of before doing anything like this:

1. 80% of 30-year fixed rate mortgages are paid off by the 5th year. There are various reasons why a mortgage would be paid off: refinancing for a lower rate or a change in terms; selling the house; needing a "cash-out refinance" to use the money for college tuition, medical expenses or other major expenses; divorce. With a second mortgage, it is next to impossible to refinance the first mortgage because the primary lender wants to be the first note on the title but other lenders are very hesitant to willingly place themselves under a new first mortgage, meaning that one would be locked into borrowing from the VUL because a new first mortgage would be out of the question and a new HELOC would be third in order (after the first mortgage and the loan used for the VUL premiums) and the interest rate would be priced to compensate for being so low in the settlement order.

2. Like other borrowing to invest situations, the results are dependent on the cost of borrowing the funds and the investment returns. The investment returns aren't certain, unless you invest in long-term CDs or bonds that you can hold until maturity, and usually the cost of borrowing funds is higher than safe investments. So, to make this worth while, you will have to put your money at risk (typically in stocks and possibly real estate).

Taking out a second mortgage, which is typically at a variable rate or a higher fixed rate, and using a high-expense instrument like VUL would reduce your chances of coming out better than if you did not take out the second loan at all and instead used discretionary funds to invest in low-expense investments.

3. If at a later date you decide to change your mind about your investments, specifically, to pull out of the VUL, you will likely lose a good chunk of money.
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