Quote:
Originally posted by bobmsmythe
It stands for "Variable Universal Life." An insurance salesman might know more about it than I do, but essentially what it does is allows you to turn a life insurance policy into an investment vehicle. You can allocate the funds you place in the policy however you want. Basically, like any insurance policy, the "value" of the policy upon your death is variable. However you can invest this value rather than letting it sit unused. It acts like any other investment account, except there are some restrictions on withdrawals and there is no income tax paid on it once you die. Again, this isn't an area where I'm particularly expert-- I avoid life insurance salesmen like the plague.
Bob
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I am a financial planner that also deals with insurance, and I avoid jockey's like the plague (just kidding wour advice has been on the mark). I will interject for a minute about a VUL:
A VUL has certain advantages. 1. The money is invested in mutual funds rather than CD's (Whole Life) or Money Market funds (Universal Life). Just know that when the market is going down (like the last few years) your insurance could be in trouble and you would have to dump more money in to keep it in force.
Another advantage is that you have access to the money through loans and a tax free return of principal. This allows the money to grow tax deffered, and most good insurance companies allow you to loan the money out at 0% interest and you never have to pay it back as long as the policy stays in force. If the policy lapses, the whole amount is viewed as a taxable distribution minus premiums.
Be very cautious with this product. If you plan on using to fund retirement, you should really max out your qualified plan first. This is for wealthy people to get tax free distributions later in life. The only way to do this right is to pay as much into it as the insurance will allow (otherwise known as the seven pay premium). If you are struggling to make the minimum payments, you are in the wrong product.
On a side not, insurace is a very important part to everyone's financial plan. It gets a bad reputation because of some slick willy salesmen back in the 80's, but can make or break your family. I can't tell you the different life a kid will have if upon your death he has 200K or 2K. Retirement, Insurance, Investments, and Estate Planning (wills and the such), all have to work together for a plan. Too often emphasis is put on one and not the other. I will check this thread more often to see if anyone has any quetions about insurance or Estate planning (or investing) that have not been answered.