I'm Buying VUL

[Nolpol]

I found my way here, fantastic forums!

I’m about to sign, but I was thinking go with whole life insurance or an IUL which is more fixed in nature. One thing that gets me about everyone’s complaints though is these are long term investments, you aren’t supposed to be touching them 10-15 years in....but I’m reading each one, and I’m not feeling great about it anymore. I have a bit of different circumstances.

I am an ccountant, my wife is a doctor...
-VUL details- 15k a year (each), so would be 30k a year, the VUL gets paid off in 10 years (when we are 41)
-we are both 31
-no student loan debt
-15 year mortgage which we pay with ease ( we don’t live above our means or plan to get divorced)
-we max out 401ks, we max out Roths, Aside we invest in stock market, we put money into savings account as well. We have a 1 year cash balance to allow either one of us to lose our jobs (or both).
-mortgage is $290k, car loans total $40k (both paid without stretching our wallet)
- variable life insurance has been proposed at 15k a year, but I’m worried market will fluctuate too much.

what are the cons before I sign this thing?

[jacoavlu]

Why?
who is selling you this?
What are the benefits?
have you priced term life insurance?

[Romberg45]

I found my way here, fantastic forums!

I’m about to sign, but I was thinking go with whole life insurance or an IUL which is more fixed in nature. One thing that gets me about everyone’s complaints though is these are long term investments, you aren’t supposed to be touching them 10-15 years in....but I’m reading each one, and I’m not feeling great about it anymore. I have a bit of different circumstances.

I am a financial accountant, my wife is a doctor...
-VUL details- 15k a year (each), so would be 30k a year, the VUL gets paid off in 10 years (when we are 41)
-we are both 31
-no student loan debt
-15 year mortgage which we pay with ease ( we don’t live above our means or plan to get divorced)
-we max out 401ks, we max out Roths, Aside we invest in stock market, we put money into savings account as well. We have a 1 year cash balance to allow either one of us to lose our jobs (or both).
-mortgage is $290k, car loans total $40k (both paid without stretching our wallet)
- variable life insurance has been proposed at 15k a year, but I’m worried market will fluctuate too much.

what are the cons before I sign this thing?

From your post, it appears that you’re buying your VUL for an investment rather than for life insurance, considering you didn’t mention how much life insurance you’re buying.

I’d be very, very careful before buying VUL as an investment. Insurance companies do not lose money on this stuff, otherwise they wouldn’t sell it.

Would you buy a car insurance policy if it had an investment within it? Then why would you buy insurance with an investment in it?

[Nolpol]

From your post, it appears that you’re buying your VUL for an investment rather than for life insurance, considering you didn’t mention how much life insurance you’re buying.

I’d be very, very careful before buying VUL as an investment. Insurance companies do not lose money on this stuff, otherwise they wouldn’t sell it.

Would you buy a car insurance policy if it had an investment within it? Then why would you buy insurance with an investment in it?

I am buying 700k, but it grows every year, at age 90 my death benefits is 3.2 million, though I question the interest I’m allowed to borrow once I deplete the funds for retirement around age 90,

at age 40 I put in 150k but cash surrender is 172k (estimated obviously)

15k per year for 15 years.

[jfoxcpacfp]

You are demonstrating a basic ignorance in the long-term returns of a well-balanced fund portfolio invested for the long term. Ignorant not meant in a derogatory way, simply that you owe it to your family to educate yourself more and do a lot more research before you sign on the dotted line with the understanding that this “guaranteed” return is in your best interests. There are many more stories on the WCI blog and this forum about readers who own these policies and want to get out with minimal financial impact than those who are happy with their decision. In fact, the purchase of one of these policies spawned the whole WCI empire and a lot of other “grandchildren” sites. (WCI, pls feel free to correct me if I’m wrong!)

[Hatton]

NO do not buy it.

[Romberg45]

Do you have kids? How much life insurance are you purchasing (that would be important to know)?

A general rule of thumb for life that I’ve discovered, the best items in life never need to be advertised heavily, or sold by an experienced salesmen with lots of training.

If gold was such a great investment, then why do they have to pay millions of dollars in TV ads? If whole life, and its cousins, were such great investments, then why do they have to pay 100% commissions to the sales agents to get them to sell the stuff?

Have you ever seen advertisements for term-life or for indexed, passively managed mutual funds? That’s because the products sell themselves.

And I wouldn’t say you have different circumstances compared to the average high income earner.

Why mix insurance with investments? You don’t do that with your car insurance, homeowners insurance, disability insurance, etc.

And don’t fall for the salesmen line of “would you rather own your life insurance or rent your life insurance?” Yeah, I’d rather rent the life insurance, just like I rent one seat on the Delta plane. It’d be extremely dumb to buy the plane.

[ENT Doc]

Please don’t do this.

[jacoavlu]

You should analyze numbers to help understand “why not”

do you know how much you could alternatively have if you invested the $15k cash per year x 15 years and held until age 90?

at a return of 3% per yr you get $1.09M , 5% $3.05M , 7% $8.47M , 9% 23.2M

this is simple compound interest and ignores taxes and ignores the alternative of the cost of term insurance and potential term life benefit.

the point is, the math is on the side of the insurance company. That’s why they own skyscrapers

[zlandar]

Buy fixed term life. Do your investments separately.

Or sign up for a complicated policy with a mediocre death benefit if you die young(the whole point of life insurance) chained to a high-cost investment you can't control. The cherry on top is the surrender fees so you can't run off when you have buyer's remorse.

[Romberg45]

I am buying 700k, but it grows every year, at age 90 my death benefits is 3.2 million, though I question the interest I’m allowed to borrow once I deplete the funds for retirement around age 90,

at age 40 I put in 150k but cash surrender is 172k (estimated obviously)

15k per year for 15 years.

I don’t know you’re entire financial situation, but $700k likely may not be enough life insurance for you. And you definitely don’t need $3.2 million in life insurance at 90 years old.

You could probably buy a $1 million 20 year term-life policy for less than $1k per year and invest the other $14k per year and you’d come out way ahead. And if you died 10 years from now, your heirs would get $1 million plus whatever your $140k grew to.

After 20 years, you should not need life insurance anymore since you have less debt and much more assets than you have now.

[The White Coat Investor]

I found my way here, fantastic forums!

I’m about to sign, but I was thinking go with whole life insurance or an IUL which is more fixed in nature. One thing that gets me about everyone’s complaints though is these are long term investments, you aren’t supposed to be touching them 10-15 years in....but I’m reading each one, and I’m not feeling great about it anymore. I have a bit of different circumstances.

I am a financial accountant, my wife is a doctor...
-VUL details- 15k a year (each), so would be 30k a year, the VUL gets paid off in 10 years (when we are 41)
-we are both 31
-no student loan debt
-15 year mortgage which we pay with ease ( we don’t live above our means or plan to get divorced)
-we max out 401ks, we max out Roths, Aside we invest in stock market, we put money into savings account as well. We have a 1 year cash balance to allow either one of us to lose our jobs (or both).
-mortgage is $290k, car loans total $40k (both paid without stretching our wallet)
- variable life insurance has been proposed at 15k a year, but I’m worried market will fluctuate too much.

what are the cons before I sign this thing?

This is a life long decision. If you can't write a long post about the cons, you are not ready to buy it. You probably shouldn't buy it anyway, but definitely don't buy it if you can't list out the cons. There are many.

https://www.whitecoatinvestor.com/va...ement-account/

[childay]

Do you have kids? How much life insurance are you purchasing (that would be important to know)?

A general rule of thumb for life that I’ve discovered, the best items in life never need to be advertised heavily, or sold by an experienced salesmen with lots of training.

If gold was such a great investment, then why do they have to pay millions of dollars in TV ads? If whole life, and its cousins, were such great investments, then why do they have to pay 100% commissions to the sales agents to get them to sell the stuff?

Have you ever seen advertisements for term-life or for indexed, passively managed mutual funds? That’s because the products sell themselves.

And I wouldn’t say you have different circumstances compared to the average high income earner.

Why mix insurance with investments? You don’t do that with your car insurance, homeowners insurance, disability insurance, etc.

And don’t fall for the salesmen line of “would you rather own your life insurance or rent your life insurance?” Yeah, I’d rather rent the life insurance, just like I rent one seat on the Delta plane. It’d be extremely dumb to buy the plane.

Lets not forget the commercials for Humana and United Health Care and the pharma commercials. "Ask your doctor about this $2000 a month medicine with no proven benefits over the $4 med!"

OP: hard stop. You should be reading for several hours on this site about such policies before even thinking about signing

[Scott at MD Financial Services]

With buying $700k and putting in $15k you are at least buying the minimum death benefit for the cash you are putting in so that is good to get max leverage, now just make sure the rep puts in a very low or no surrender charge so that you maintain more flexibility. Most carriers have that feature, just not many reps will use it because it cuts the commission down and allows for commission charge backs to the rep in the first few years if you do cancel.

[Tim]

“I am a financial accountant, my wife is a doctor..”
With all due respect, this analysis is probably not in your wheelhouse. The does not mean you can’t figure it out.
Contract issues
Financial performance
Flexibilty
Know what you are buying. This is probably a poor use of your money. Typically these are products to be sold, not to be purchased. The agent and insurance company actuarially extract a pound of flesh for an insurance wrapper on your perceived investment. Odds are against you unless you die early.
•term life insurance in amounts you need
•invest the excess
Hopefully you don’t collect early on the term insurance. Try that and you will be best served.