Understanding Life Insurance, Variable Policies
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The Variable in a Variable Universal Life (VUL) policy means that the cash value is invested in a separate account. The separate account consists of mutual funds. To offer this policy your financial adviser must be licensed as an insurance agent and registered with FINRA. The cost is the nearly equal with the EIUL. But there are no limits, either up or down, to your cash value. The performance of the underlying mutual fund is what the returns are based on.
Now, in twenty years, my clients can stop premiums payments and still be covered. At retirement, or whenever the policy allows, the client can make withdrawals and take loans out on the cash value.
Did I mention that there isn’t any tax on any of the returns? Grow your account tax-deferred and use it tax-free. And pass it on with little to no tax burden on your beneficiaries.
How do you like the sound of that?
One Comment
John Isensee
November 25th, 2007
at 8:21pm
Having been licensed in both Insurance and Securities and having sold Variable Annuities (a similar product) one must be aware of the potential front loaded or back loaded charges used to pay sales commissions and the high administrative costs of fund management.
If one doesn’t like the funds offered and attempts to get out of the annuity contract they may find they are hit with penalty charges usaually starting at 7% the first year and reducing to 0% over the required holding period. this is to insure that the insurance company recovers the commission paid to the sales person if a client opts out of a contract at an early date.