Variable universal life insurance; (VUL) may be a risk based policy. I say maybe a risk policy; because you could elect to fund the fixed account, but the expense loads are so costly, that would be a mistake and not worth it. Many consumers, who purchase VUL, fund their sub-accounts; which has market risk. It seems antithetical to purchase a risk based policy to insure proper coverage.
That being said, VUL may be a consideration for long term investors who are suitable for risk and are looking for the additional tax advantaged features. If the VUL policy is designed with the lowest TAMRA compliant death benefit and kept in force for the life of the insured, it can be an alternative investment option.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Is variable universal life worth it? It's going to depend on the individual who purchases it. Variable Universal Life has many "moving parts" that require attention. This is not a purchase and put in the drawer policy. It requires "management" by the individual who purchases it. These policies may require rebalancing and/or changing funding options within the choices. Anyone who purchases a VUL should have a good understanding of investment risk and what it requires for the best possible outcome.
For me personally, I am not a fan of VUL as I feel some things in a portfolio should be boring, safe and consistent and offer a reasonable return. I feel traditional old fashioned whole life offers that to an individual. It becomes a personal question of how much RISK a person should have. For me, my whole life respresents a boring financial product, one that did'nt go backwards in 2008, when all my exciting ones did. Personally, I want something that is steady, along with something else that has more risk but greater return possibilities. Again personally speaking, I don't feel insurance should ever be an "at risk" product. Just me, old school, sorry.
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That being said, VUL may be a consideration for long term investors who are suitable for risk and are looking for the additional tax advantaged features. If the VUL policy is designed with the lowest TAMRA compliant death benefit and kept in force for the life of the insured, it can be an alternative investment option.
For me personally, I am not a fan of VUL as I feel some things in a portfolio should be boring, safe and consistent and offer a reasonable return. I feel traditional old fashioned whole life offers that to an individual. It becomes a personal question of how much RISK a person should have. For me, my whole life respresents a boring financial product, one that did'nt go backwards in 2008, when all my exciting ones did. Personally, I want something that is steady, along with something else that has more risk but greater return possibilities. Again personally speaking, I don't feel insurance should ever be an "at risk" product. Just me, old school, sorry.