Low Cost Life Insurance

I currently work in insurance. I personally have a UL because I want the death benefit and for it to accumulate a cash value, I’m in my 20’s so I have the advantage of lower cost premiums. Whole life where I work is just that, whole life, but with the UL you get options. With the VUL you have more risk as far as the added cash value, but you still get the death benefit. It all depends on what your situation is like and what you’re in the need for.

Wow, that’s like saying, which is better, open heart surgery or a kidney transplant?

I wouldn’t buy EITHER.

What’s your GOAL? What’s the cheapest way to meet it?

Variable life with a guaranteed death benefit does NOT have a guaranteed premium. That’s why it’s VARIABLE.

Neither is a good or effective INVESTMENT vehicle.

In any case, if this guy is pushing something you don’t want, I’d switch to a new agent. I don’t like pushy agents. There’s probably a big fat extra commission on the VUL if he sells it.

If I actually knew the products (not the type of product), I might be able to advise you a little more specifically. Let it be known that there is whole life that is not guaranteed and there are variable life policies that are guaranteed. A clever agent (and perhaps that would be a problem) would know how to illustrate a VUL with a higher premium or lower premium than a whole life for the SAME amount of coverage.

The illustration you have received is not a contract, but it is an indicator of how your contract would behave if you make payments in the time frame indicated. That will show you what is guaranteed and non-guaranteed.

I am a firm believer in leaving your investments as investments & your insurance as insurance. I dont like the combo for those particular products. Yes, a VUL will change rates according to the investments in it. If you want whole life, buy whole life, if you want an investment, buy an investment. But dont buy an investment in a life insurance policy.

I would also consider buying term rather than whole life. Depending on the amount you need, it could be a safer bet for you. But get another opinion other than that agent, it seems that he already knows what he wants you to have vs. listening to what you need/want.

Check the link below, This is an article from Money magazine. Do you watch Suze Orman? Do you respect her opinion? Go to yahoo finance and look under the experts.

Why do you want insurance now? Do you have anyone that depends on your income? If you don’t, you may not need a whole lot. Life insurance should be called income replacement insurance because that is exactly what it does- replaces income.

Insurance was meant to be for a limited time, only. That is how it started- term insurance. In both WL and VUL, you pay for two things- cost of insurance and savings. In specifics they differ this way: WL you pay for level term insurance for the life of the policy. The part of your premium to COI does not change. The amount that goes to the “savings” also does not change. For instance, you have a $120 premium. $30 will go to COI and $90 will go to “savings.”

For VUL, it to is split in two- COI and “savings.” The insurance you pay for here is annually renewable term. So, every policy anniversary date, the COI will increase every year. The other part, “savings”, is invested in mutual funds. But, as COI goes up, the amount that goes to insurance increases each year and the amount that goes to “savings” decreases each year. At a certain point, the COI will be higher than savings; and so begins the withdrawal of funds from the savings to cover what is missing from COI. For example, $120/month. 1st year/month $25 to COI and $95 to savings. 2nd year $120/month $27 to COI and $93 to savings. And so forth, until $120/month $61 to COI and $60 to savings. There is an extra dollar that needs to be made up. The company takes it from your cash value each month until ALL cash value has been used up.

Five rules to WL and VUL policies: 1) in first couple, or more, years there is NO cash value. 2) when they do produce interest, it will be at about 1-4% per year( with VUL you have to take fees and such into account for the management of the funds they invest in). 3) If you take money from the cash value, it is a loan. Interest accrues on any withdrawal between 6-8%. I thought this was YOUR money? 4) prepare your emergencies in advance, you may have to wait up to 6 months to receive that cash. 5) unless you pay extra each month, your heirs will decide between face amount of the policy OR cash value. By paying extra in premium they can get both.

Please reconsider your choice for either one. Think about Level Term insurance for at least 30 years. You can maximize your coverage/face amount while minimizing what you pay per month. Take the savings be tween term and WL or VUL and invest it yourself. Your money is YOUR money. It accrues interest from the beginning. You can earn from5% on up, from the start. The lag of those first couple years seriously reduces what it would be by investing yourself. You can take it out when you want or need it. No interest to pay back. And when you die, your heirs get it AND the face amount of your insurance.

Get term insurance instead. It’s way cheaper, and you can take the difference in premium and invest it somewhere else without paying big fees on it.