A place for VUL? Advice appreciated..

[changunga]

Dear Group,
while I have read extensively at the dangers of the VUL on this website, I am hoping you will consider my somewhat unique situation and tell me, given all the circumstances that don't quite fit the norm here, if I am an appropriate user of VUL.

What makes me unique is that I graduated from residency at 26 in quite a lucrative specialty. I work full-time in private practice and part-time at the University. This is my first full year out and I am expected to pull in about 370K this year. For the first year in my practice, I wasn't able to start contributing to my 401K and will start doing that at the beginning of January. In the meantime, I have maxed out my University 403B and Roth IRA. I am also considering opening an individual LLC for some of my third party miscellaneous income as well. I have no kids and am single so I have pretty much maxed out all my tax advantaged space.

Right now my monthly breakdown includes 3K to traditional investment accounts, 3K to my VUL, 1.5 K to 403B, 4K to my student loans (should be paid off in 3.5 years). I rent, so I don't really have any other significant expenses at the time being. My advisor suggested the VUL as a way to maximize my tax-protected space down the road, since I am at a bit of a disadvantage at that sense. He used his group's analysis tool to show how the VUL would perform favorably against traditional investments in my scenario.  Also, it's not like I need the money for anything else right now, but I might down the road.

I've put about 30K in it at this point,so If I needed to get rid of it it wouldn't be a huge deal for me. Me and my advisor have definitely butt heads on the topic, and he agreed that it is widely misused in the industry. At this point, it just makes me nervous and I am leaning towards just getting rid of it. His argument is that since I have already maxed out all my other tax advantaged accounts and am making significant investment contributions, I should just keep going. Is this a place where VUL makes sense? If not, what do i do with the 3k a month?

Thanks in advance!

[AR]

Put the 3K a month in a regular taxable account. Just buy Vanguard total market or something until you come up with a better plan.

If you've read all the articles on here, then I think you know the arguments pretty well.

I also think that I can almost categorically state that a salary of 370K a year is not enough to justify a permanent policy under almost any circumstances.  And there is nothing special about your situation that would make me think otherwise.

[q-school]

My experience with multiple aum advisors is that that they all don't know what they don't know.

I mean to say that they don't know what accounts look like for people without 1% aum.  Even if well intentioned they are comparing results within the AUM field.  so they always say you're doing very well, even if the curves for AUM versus no AUM start to diverge over the years.

for most physicians who are saving and investing, they won't know any better and are just happy to get a colored graph that shows good uptrending results.  they don't always think about what could have been.

my experience with hearing a lot of VUL pitches is that the policies are very different.  i've been hearing from my senior partners for the last fifteen years that tax rates can only go up.  they argue to look at the debt and the deficit.  they wanted taxes taken out now if they anticipate being in the highest tax groups in retirement.  yada yada yada

future is hard to predict.

congratulations on thinking about these things.  you're off to a terrific start.

 

 

[FIREshrink]

there’s nothing unique about your situation. you don’t need VUL. get a new advisor, preferably one who isn’t an insurance salesman.

[DMFA]

• Fire advisor, esp if he charges AUM


• 1035-exchange VUL if you can, otherwise just eat the cost  :?


• I beg your pardon, but your situation is not unique in the slightest (3 years not a big shift), and your young age and lack of large estate or family makes it even less advantageous to have cash-value life insurance


• Set up a SEP-IRA for your 2017 self-employment earnings, contribute to it in early 2018 (specify contributions for 2017)


• Set up an individual 401(k) for your 2018 self-employment earnings, effective date 1/1/2018


• Roll SEP into 401(k) in 2018


• Continue backdoor Roths (you did that this year, right, since you'll prob be over income limit for direct contribution)


• Get a high-deductible health plan and invest in HSA

Here's the house roadmap for cash-value life insurance decision-making:


Cheers, good luck, welcome to the community  

[changunga]

Thanks all for your helpful advice! I think I knew this, just needed someone to tell me straight... something at which you all excel!

[The White Coat Investor]

changunga wrote:

Dear Group,
while I have read extensively at the dangers of the VUL on this website, I am hoping you will consider my somewhat unique situation and tell me, given all the circumstances that don’t quite fit the norm here, if I am an appropriate user of VUL.

What makes me unique is that I graduated from residency at 26 in quite a lucrative specialty. I work full-time in private practice and part-time at the University. This is my first full year out and I am expected to pull in about 370K this year. For the first year in my practice, I wasn’t able to start contributing to my 401K and will start doing that at the beginning of January. In the meantime, I have maxed out my University 403B and Roth IRA. I am also considering opening an individual LLC for some of my third party miscellaneous income as well. I have no kids and am single so I have pretty much maxed out all my tax advantaged space.

Right now my monthly breakdown includes 3K to traditional investment accounts, 3K to my VUL, 1.5 K to 403B, 4K to my student loans (should be paid off in 3.5 years). I rent, so I don’t really have any other significant expenses at the time being. My advisor suggested the VUL as a way to maximize my tax-protected space down the road, since I am at a bit of a disadvantage at that sense. He used his group’s analysis tool to show how the VUL would perform favorably against traditional investments in my scenario.  Also, it’s not like I need the money for anything else right now, but I might down the road.

I’ve put about 30K in it at this point,so If I needed to get rid of it it wouldn’t be a huge deal for me. Me and my advisor have definitely butt heads on the topic, and he agreed that it is widely misused in the industry. At this point, it just makes me nervous and I am leaning towards just getting rid of it. His argument is that since I have already maxed out all my other tax advantaged accounts and am making significant investment contributions, I should just keep going. Is this a place where VUL makes sense? If not, what do i do with the 3k a month?

Thanks in advance!

Click to expand...

Uh....you and your advisor butt heads? That seems problematic, no? The fact that you're here asking questions suggests to me you won't be using an advisor for much longer. I mean, why would you pay an advisor if you have to double check what he's telling you to do or if you like this stuff enough to read a half dozen VUL posts on WCI?

At any rate, I'm not seeing a good reason to use a VUL. You've only got $370K in income, no significant taxable account, AND YOU STILL HAVE STUDENT LOANS. I think recommending a VUL to you was bad advice, and I'm NOT the most-anti-VUL person on this forum. That $36K ought to be going toward your student loans in my opinion. Maybe if your income grew to $800K and you had no debt and a huge taxable account and were maxing everything else out I could be convinced that a VUL might work out well for you. But that's not your situation.

And I agree with the person above who said you're not unique. You're not. Your situation sounds pretty much like every one else's. This "you're special" line is frequently used to sell stuff you don't need.

By the way, will you PM me the name of your advisor? I have a pretty good idea what the company is but I'd like to know the advisor.

[nishant144]

The only thing unique about your situation is how young you are. Graduating residency at 26!? How many grades did you skip?

[MaxPower]

Another Larson Financial victim I see...

Run while you still can. Let me guess, did your advisor not tell you anything about refinancing your student loans either?

[Peds]

you are not a special snowflake.

that VUL is a bad idea.

 

good luck.

[BryanMD]

<blockquote class="d4pbbc-quote">
<div class="d4p-bbp-quote-title"><a href="https://www.whitecoatinvestor.com/forums/topic/a-place-for-vul-advice-appreciated/#post-91475">changunga wrote:</a></div>
<div class="d4p-bbp-quote-body">

Dear Group,
while I have read extensively at the dangers of the VUL on this website, I am hoping you will consider my somewhat unique situation and tell me, given all the circumstances that don’t quite fit the norm here, if I am an appropriate user of VUL.

What makes me unique is that I graduated from residency at 26 in quite a lucrative specialty. I work full-time in private practice and part-time at the University. This is my first full year out and I am expected to pull in about 370K this year. For the first year in my practice, I wasn’t able to start contributing to my 401K and will start doing that at the beginning of January. In the meantime, I have maxed out my University 403B and Roth IRA. I am also considering opening an individual LLC for some of my third party miscellaneous income as well. I have no kids and am single so I have pretty much maxed out all my tax advantaged space.

Right now my monthly breakdown includes 3K to traditional investment accounts, 3K to my VUL, 1.5 K to 403B, 4K to my student loans (should be paid off in 3.5 years). I rent, so I don’t really have any other significant expenses at the time being. My advisor suggested the VUL as a way to maximize my tax-protected space down the road, since I am at a bit of a disadvantage at that sense. He used his group’s analysis tool to show how the VUL would perform favorably against traditional investments in my scenario. Also, it’s not like I need the money for anything else right now, but I might down the road.

I’ve put about 30K in it at this point,so If I needed to get rid of it it wouldn’t be a huge deal for me. Me and my advisor have definitely butt heads on the topic, and he agreed that it is widely misused in the industry. At this point, it just makes me nervous and I am leaning towards just getting rid of it. His argument is that since I have already maxed out all my other tax advantaged accounts and am making significant investment contributions, I should just keep going. Is this a place where VUL makes sense? If not, what do i do with the 3k a month?

Thanks in advance!
<div class="d4p-bbp-quote-expand">Click to expand...</div>
</div></blockquote>
Uh....you and your advisor butt heads? That seems problematic, no? The fact that you're here asking questions suggests to me you won't be using an advisor for much longer. I mean, why would you pay an advisor if you have to double check what he's telling you to do or if you like this stuff enough to read a half dozen VUL posts on WCI?

At any rate, I'm not seeing a good reason to use a VUL. You've only got $370K in income, no significant taxable account, AND YOU STILL HAVE STUDENT LOANS. I think recommending a VUL to you was bad advice, and I'm NOT the most-anti-VUL person on this forum. That $36K ought to be going toward your student loans in my opinion. Maybe if your income grew to $800K and you had no debt and a huge taxable account and were maxing everything else out I could be convinced that a VUL might work out well for you. But that's not your situation.

And I agree with the person above who said you're not unique. You're not. Your situation sounds pretty much like every one else's. This "you're special" line is frequently used to sell stuff you don't need.

By the way, will you PM me the name of your advisor? I have a pretty good idea what the company is but I'd like to know the advisor.

Could anyone elaborate on why the VUL might work out well if the physician made $800k a year, was debt free, and was maxing out tax protected accounts with a lot sitting in a taxable account?

[Lithium]

Could anyone elaborate on why the VUL might work out well if the physician made $800k a year, was debt free, and was maxing out tax protected accounts with a lot sitting in a taxable account?

Taxable accounts are not as attractive for someone making that much money. Especially if taxes get raised and capital gains are taxed as ordinary income.

[White.Beard.Doc]

Would life insurance make sense for a later career physician entrepreneur with a very large tax deferred account, a very large taxable account, a very large real estate portfolio, ownership of a highly valued, privately held business, and a likely huge estate tax bill coming due in a few more decades?

[Hank]

Would life insurance make sense for a later career physician entrepreneur with a very large tax deferred account, a very large taxable account, a very large real estate portfolio, ownership of a highly valued, privately held business, and a likely huge estate tax bill coming due in a few more decades?

Asking for a friend?

[White.Beard.Doc]

Asking for a friend?

Yup.