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sugargenius
Guest
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 Posted:
Sat Nov 05, 2005 5:00 pm Post subject:
Does VUL make sense? |
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Sorry if this is a repost, but I tried to post last night and it's not
showing up on my news server.
I recently went into business for myself, and I trying to decide how to
save for retirement. I used to just max out my 401k. Now what to do?
I met with a FP, and he recommended a $500k VUL and an add'l $1 mil
term. The VUL is $1k/mo. and the term is $600/yr.
I am 36 yr old, married, and have 1 child. Combined income is 160k
(80% mine).
According to his illustrations (current charges and 10% growth/9.25
net), I can expect to withdraw $132k/yr for 20 years when I'm 65.
Is what he's proposing make sense? Would I be better off with SEP or
VA?
Thanks,
Woody
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John A. Weeks III
Guest
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| Posted:
Sat Nov 05, 2005 5:00 pm Post subject:
Re: Does VUL make sense? |
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| Quote: | Is what he's proposing make sense? Would I be better off with SEP or
VA?
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No, stay clear of VUL. Yes, a SEP program would be better.
The VUL illustrations are always wildly optimistic. They
never take into account real world conditions like 3 straight
years of a down market like we saw earlier this decade. The
reason this so called "planner" is pitching this thing is that
they get an enormous commission for doing so.
If you do have a legitimate need for life insurance, look
into term policies. You will find them to be far cheaper
than these so-called permanent insurance plans.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
====================================================================== |
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BMS
Guest
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| Posted:
Sat Nov 05, 2005 5:00 pm Post subject:
Re: Does VUL make sense? |
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What are your insurance needs? Look at what you are insuring and then decide
what to buy.
For family protection and wealth transfer, insurance (probably a mix of term
and permanent) works best.
For accumulating wealth, today's VA with their benefits makes sense such as
principal protection.. If you want to take more risk, use mutual funds and
other investments.
You don't have a FP, you have an insurance salesman. Who does he work for?
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sugargenius
Guest
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| Posted:
Sat Nov 05, 2005 11:32 pm Post subject:
Re: Does VUL make sense? |
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| He is with Principal Life |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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John you never do give up do you?
There is no doubt that ANY term policy is "cheaper to buy",
since the Death benefit is only "in-force" DURING that
SPECIFIC period of time. If one were to DIE during that
SPECIFIC period of time, then yes it would have been
a VERY CHEAP form of coverage. IF however that person
DOES NOT DIE DURING THAT SPECIFIC PERIOD OF
TIME, then that policy has become very EXPENSIVE, and
there may be NO COVERAGE IN-FORCE AT THE TIME OF DEATH.
Cal Lester CLU |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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...
| Quote: | What are your insurance needs? Look at what you are insuring and then decide
what to buy.
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At least this poster asks questions, as to NEED..
| Quote: |
For family protection and wealth transfer, insurance (probably a mix of term
and permanent) works best.
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Notice the "probably", not a definete specific answer, since the
poster does not have sufficient info to make that descision
| Quote: |
For accumulating wealth, today's VA with their benefits makes sense such as
principal protection.. If you want to take more risk, use mutual funds and
other investments.
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Both of the above seem to make some sence
| Quote: |
You don't have a FP, you have an insurance salesman. Who does he work for?
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Here, he has gone out on a limb. We have no idea as to the credentials of that FP,
therefore we should NOT castigate him/her.
btw, don't we ALL hope to receive remuniration for our time & effort?????????????????
Cal Lester CLU |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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| Quote: | | He is with Principal Life |
The fact that he is licensed with Principal Life, does not make him
a better or worse person.
Cal Lester CLU |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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NOW, as to the original post, the question, the VUL contract is one in
which the INSURED retains the option on where to INVEST the Cash
Value Account (Guaranteed Reserve). This may or may not have
merit. I most certainly will not enter into a debate on that score. It is
really a personal choice to be made by an INFORMED Prospect, with
the aid of an INFORMED salesperson (yes we are ALL salespersons).
It is important to note however, that in general the EXPENSES involved
in the VUL contract are a great deal MORE than those in a standard U/L policy.
Again, this might be either "good or bad", depending on the outcome.
HOWEVER, what the original poster NEEDS is the services of a
PROFESSIONAL, who would determine that TRUE Needs, Wants
and Desires of the Client, and then recommend the product or products
that will "best fir those N/W/D 's.
Cal Lester CLU |
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John A. Weeks III
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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| Quote: | There is no doubt that ANY term policy is "cheaper to buy",
since the Death benefit is only "in-force" DURING that
SPECIFIC period of time. If one were to DIE during that
SPECIFIC period of time, then yes it would have been
a VERY CHEAP form of coverage. IF however that person
DOES NOT DIE DURING THAT SPECIFIC PERIOD OF
TIME, then that policy has become very EXPENSIVE, and
there may be NO COVERAGE IN-FORCE AT THE TIME OF DEATH.
|
I never give up because common sense does not have an
expiration date. Very few people really need life insurance,
and those that do normally need it only for a short period
of time. There is no sense in investing large amount of
money into a life insurance policy that isn't needed. Doing
so is about the same as buying lottery tickets. Life
insurance is not a product that you buy to get rich in
the event of a death. It should only be purchased when
needed, in the amount that is needed, and only as long
as needed. Paying one penny more than what is needed is
just a waste of money.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
====================================================================== |
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Don
Guest
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| Posted:
Sun Nov 06, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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| Quote: | Is what he's proposing make sense? Would I be better off with SEP or
VA?
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My understanding is that VUL is a package of components something like a
combination of a term policy and a mutual fund. I am wondering if you
couldn't get the same protection and long term growth by just buying term
insurance together with a no-load mutual fund with low expenses. This way
you pay nothing to sales and management for putting the package together.
Another reason a do-it-yourself plan might produce more gain in the long run
is that the equity portion of VUL may be limited to a small number of funds
which have high expenses. But if you do it yourself you can choose something
like Vanguard or an index fund that will yield more in the long run and you
still have separate term insurance. Just a thought. |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 5:01 pm Post subject:
Re: Does VUL make sense? |
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| Quote: |
I never give up because common sense does not have an
expiration date. Very few people really need life insurance,
and those that do normally need it only for a short period
of time.
|
You might want to explain that to a widow & her children
There is no sense in investing large amount of
| Quote: | money into a life insurance policy that isn't needed. Doing
so is about the same as buying lottery tickets.
|
The lottery ticket analogy, although it sounds cute,
is NOT valid. True there is an element of chance
involved, but that is on the part of the carrier.
We all do die. The intenet is to have the contract
"in-force" whwn we do.
Life
| Quote: | insurance is not a product that you buy to get rich in
the event of a death. It should only be purchased when
needed, in the amount that is needed, and only as long
as needed.
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Surprisingly enough, you are correct here. However,
the rub is in figuring out "as long as needed".
Cal Lester CLU |
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Cal Lester
Guest
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| Posted:
Sun Nov 06, 2005 5:01 pm Post subject:
Re: Does VUL make sense? |
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| Quote: | My understanding is that VUL is a package of components something like a
combination of a term policy and a mutual fund. I am wondering if you
couldn't get the same protection and long term growth by just buying term
insurance together with a no-load mutual fund with low expenses.
|
The answer here is an ABSOLUTE NO ! ! ! ! Although you could in
all probability get more value from the mutual fund "outside" of a
VUL, the term insurance costs would not only mount over time, but
ALL Term Insurance has an EXPIRATION date, which may or
may nor be before YOUR expiration.
Cal Lester CLU
btw, I do NOT necessarily recommend VUL in my practice |
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Don
Guest
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| Posted:
Mon Nov 07, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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| Quote: | all probability get more value from the mutual fund "outside" of a
VUL, the term insurance costs would not only mount over time, but
ALL Term Insurance has an EXPIRATION date, which may or
may nor be before YOUR expiration.
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But the need for any form of life insurance would decline over time as the
value of the mutual fund grows. Of course, people without dependents do not
need life insurance at all, and accumulation of cash value would best be
sought purely through equities. |
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BMS
Guest
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| Posted:
Mon Nov 07, 2005 1:01 am Post subject:
Re: Does VUL make sense? |
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If somebody shows an illustration with a 10% return, they are more
interested in selling insurance than financial planning.
I'm a devote capitalist. Nobody manages your money for free.
| Quote: | You don't have a FP, you have an insurance salesman. Who does he work
for?
Here, he has gone out on a limb. We have no idea as to the credentials
of that FP,
therefore we should NOT castigate him/her.
btw, don't we ALL hope to receive remuniration for our time &
effort?????????????????
Cal Lester CLU
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Cal Lester
Guest
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| Posted:
Mon Nov 07, 2005 9:01 am Post subject:
Re: Does VUL make sense? |
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"BMS" <mcfarland@yahoo.com> wrote in message news:8eidnYpGC9KN8_PenZ2dnUVZ_s-dnZ2d@comcast.com...
| Quote: | If somebody shows an illustration with a 10% return, they are more
interested in selling insurance than financial planning.
I'm a devote capitalist. Nobody manages your money for free.
|
I agree 1000% , nor performs any worthwhile services.
Cal Lester CLU |
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