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NFT: Finance Question - Variable Universal Life 6

UConn4523 : 7/9/2019 10:19 am
For the Finance folks, what's your take on Variable Universal Life 6? My father put a small amount of money in a policy for my daughter and I will be taking over the yearly premiums moving forward. I need to make an appointment with his financial advisor to review it in more detail but I'm curious if others have experience with one and/or any feedback.

Seems like the pluses are the death insurance component as well as the tax-free withdrawals of cash. I still need to better understand the fee structure.
I work more on the medical side  
Bockman : 7/9/2019 10:26 am : link
but have my accident, life and health producer license.

It's kind of my opinion that anything other than term life for the unexpected is the only real policy worth it, and that any of the "investment" policies aren't great shakes.

Basically, other investments will offer far better returns with only slightly more risk. IRA, real estate, dividend stocks, etc.
I should add that variable policies typically have higher fees  
Bockman : 7/9/2019 10:27 am : link
than other types of life insurance.
You’d have to define to yourself what a small contribution is  
Shecky : 7/9/2019 10:34 am : link
A VUL works great when they are maximum funded.
They are worthless when they are minimum funded
If the “advisor” is pushing you to do anything less than the maximum contribution - that should be telling of his quality of advice and intentions.
Good luck.
RE: You’d have to define to yourself what a small contribution is  
UConn4523 : 7/9/2019 10:38 am : link
In comment 14495041 Shecky said:
Quote:
A VUL works great when they are maximum funded.
They are worthless when they are minimum funded
If the “advisor” is pushing you to do anything less than the maximum contribution - that should be telling of his quality of advice and intentions.
Good luck.


I believe it started with $5k and the yearly contribution is $500. Doesn't seem like much.
..  
Named Later : 7/9/2019 10:59 am : link
I always separate the Insurance from the Investment. You can get very affordable Term Insurance for a kid that age.

As for the Investment portion, you can do the same thing on your own with regular (but not mandated) contributions into the Stock Market.....over the long run the Market trends upward and the kid's got a long horizon.

Check what the Fees are on this VUL. The Advisor gets paid first, so your contribution is discounted before you make a dime.

One thing to keep in mind -- for College Tuition Aid purposes money in the child's name is counted 100% towards tuition and offsets Aid. There are ways to avoid that hit.
This type of policy is complex...  
Dan in the Springs : 7/9/2019 11:03 am : link
you need to look at the fee structures inside of the policy. This used to be easier to do. Agents don't like to show you those costs, and believe it or not, some don't even know.

I've seen policies with max fees inside - horrible.

It's been some years, but there used to be some policies available with extremely low fees - basically a term policy with a low-fee mutual fund attached.

If you can find one of those, the tax advantages are great and you should buy and max fund it if you can.

If you can't find one, the tax advantages will be lost due to the fees in most cases.
RE: I work more on the medical side  
Alan in Toledo : 7/9/2019 11:16 am : link
In comment 14495030 Bockman said:
Quote:
but have my accident, life and health producer license.

It's kind of my opinion that anything other than term life for the unexpected is the only real policy worth it, and that any of the "investment" policies aren't great shakes.

Basically, other investments will offer far better returns with only slightly more risk. IRA, real estate, dividend stocks, etc.


+1
good info, thanks guys  
UConn4523 : 7/9/2019 11:25 am : link
i'm going to get more info soon, need to find the time to meet with him to discuss fees and understand the strategy better.
Agree with others here  
TyreeHelmet : 7/9/2019 11:31 am : link
Seperate investments and insurance. Cheap term is fine but don't agree with using life insurance as investment vehicle. Just my 2 cents...
VUL  
floridafan : 7/9/2019 3:38 pm : link
Who is the issuing company?
How much is the death benefit?
Is it a level or increasing benefit?
Have you gotten an inforce illustration?...Get one.
What is her underwriting class....most likely she was classified as a smoker, that is how most companies handle a minor.
Small premium.....these policies are designed to work efficiently when the premium is paid to maximum allowable level.
If you are not prepared or want to do this, your long term performance will not be desireable.
You would be better off cancelling and putting the money elsewhere.
RE: VUL  
UConn4523 : 7/9/2019 3:50 pm : link
In comment 14495355 floridafan said:
Quote:
Who is the issuing company?
How much is the death benefit?
Is it a level or increasing benefit?
Have you gotten an inforce illustration?...Get one.
What is her underwriting class....most likely she was classified as a smoker, that is how most companies handle a minor.
Small premium.....these policies are designed to work efficiently when the premium is paid to maximum allowable level.
If you are not prepared or want to do this, your long term performance will not be desireable.
You would be better off cancelling and putting the money elsewhere.


Here's what I've got as of now.

Death Benefit - $250,000, not sure if it increases but doesn't look like it
Non-tobacco
Don't know what the maximum premium is, just that its set $500 yearly

Won't know the rest until I meet with the guy.
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