Variable Life Insurance as an Investment

By | March 5, 2009
Life insurance premia written in 2005
Image via Wikipedia

Is VUL or Variable Life Insurance a good Investment?  This debate will never end, and it shouldn’t quite frankly.  There are too many variables “no pun intended” that go into whether or not this type of plan can be a great investment.

My personal feelings are that yes it can and no it can’t it depends on how it is structured, funded and your time horizon.  I do have a VUL plan that I probably havent funded correctly.  This plan can work great for insureds who one, are fully taking advantage of their qualified plans.  They can overfund the policy for a number of years and most likely wont need the money.

If you cant fund to policy correctly and that means most likely over funding it, you probably wont be impressed with how it performs.  This policy has cost’s associated with it that acts like a drag on investment returns so you need to be prepared to fund correctly.  You much either be able to put decent sums into the policy or have a long time horizon to commit and pay the premiums.  I ran an illustration for a 25 year old the other day and at age 65 it looked awesome after putting in $5k a year.

Look at a bunch of illustrations and ask your broker or agent a ton of questions to determine if this type of plan is for you.

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