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Add me to the list of docs who did not know better about VULs. I am unfortunate enough to have more than one Variable Life Policies with Northwestern!
I opened the first one in residency. I thought my financial advisor had my interests in mind. I thought everyone provided all the “pros, cons, and alternatives.” I’ve learned a lot since those days.
I was sold my first policy, despite not maxing out my retirement accounts and having large student loans. It was my “financial advisor’s” answer to the best means of saving for retirement. Later, with my first job, I wanted to save more and got talked into opening another VUL.
I actually asked a lot of questions. I remember asking specifically about any fees and penalties - I was told “there are no penalties” , and that I could take my money out anytime. Turns out I can “borrow” my own money anytime for 5% fixed interest and there are surrender charges that disappear after 16 years!!
I’ve learned a lot from this website. I still don’t understand these policies completely, but I’m ready to cut my losses and get rid of them.
The cash value of my VUL is about 100K which is about the balance of my student loans (@2.6% interest rate). With the pretty good interest rate on the student loans, I feel like it is an more of a feel-good decision to get rid of both these burdens in one swoop. And it would free up a good chunk of money for me to put towards 529, other savings, etc.
My questions are ... Since I’ve had the older policy for about 12 years, is that reason enough to keep it? Or in other words: if worth keeping from fee standpoint, How would such policy ever benefit me in the future? Also, any major red flags with using the money to pay off student loans? Some info about me:
- I’m trying to get rid of all debt. I don’t understand the logic of ever borrowing my own money at 5% interest
- I won’t even be able to access the gains without 5% interest !?
- I’m over insured: I have more term life insurance than I need through work (up to age 70)
- I don’t see a need for permanent death insurance for me
- The gains in one policy are small (about $1,000) and Zero in the 2nd policy (I opened in 2008)
- I don’t think I need it for estate planning: I don’t have expensive property or a business, etc
- I’m maximizing my 401K and (back door Roth) IRA - only other loan is mortgage
- I understand a good chunk of my money is already lost here
Live and learn. My next task is to review the disability policy my advisor sold me...
I opened the first one in residency. I thought my financial advisor had my interests in mind. I thought everyone provided all the “pros, cons, and alternatives.” I’ve learned a lot since those days.
I was sold my first policy, despite not maxing out my retirement accounts and having large student loans. It was my “financial advisor’s” answer to the best means of saving for retirement. Later, with my first job, I wanted to save more and got talked into opening another VUL.
I actually asked a lot of questions. I remember asking specifically about any fees and penalties - I was told “there are no penalties” , and that I could take my money out anytime. Turns out I can “borrow” my own money anytime for 5% fixed interest and there are surrender charges that disappear after 16 years!!
I’ve learned a lot from this website. I still don’t understand these policies completely, but I’m ready to cut my losses and get rid of them.
The cash value of my VUL is about 100K which is about the balance of my student loans (@2.6% interest rate). With the pretty good interest rate on the student loans, I feel like it is an more of a feel-good decision to get rid of both these burdens in one swoop. And it would free up a good chunk of money for me to put towards 529, other savings, etc.
My questions are ... Since I’ve had the older policy for about 12 years, is that reason enough to keep it? Or in other words: if worth keeping from fee standpoint, How would such policy ever benefit me in the future? Also, any major red flags with using the money to pay off student loans? Some info about me:
- I’m trying to get rid of all debt. I don’t understand the logic of ever borrowing my own money at 5% interest
- I won’t even be able to access the gains without 5% interest !?
- I’m over insured: I have more term life insurance than I need through work (up to age 70)
- I don’t see a need for permanent death insurance for me
- The gains in one policy are small (about $1,000) and Zero in the 2nd policy (I opened in 2008)
- I don’t think I need it for estate planning: I don’t have expensive property or a business, etc
- I’m maximizing my 401K and (back door Roth) IRA - only other loan is mortgage
- I understand a good chunk of my money is already lost here
Live and learn. My next task is to review the disability policy my advisor sold me...
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