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Variable Life is a worthwhile product providing you have a need for continuous
life insurance coverage, and you can afford the premiums required to purchase
the face amount of coverage that is required. Until recently it was only
available through commissioned agents and some policy offerings have annual
expense ratios that are offputting to some individuals who overemphasize
"costs."
However, if you do need permanent coverage; if you believe in the viability of
investing in common stocks (whether using a "timing" approach, or not) there is
much to be said for the contracts. While I am not now in the insurance business
at one time I was responsible for the securities operations of a major financial
conglomerate, and because of that background, assisted a cousin of mine to
implement part of his late in life financial planning. We secured a $1,500,000
last to die variable life policy on he and his wife joint lives. Annual
estimated premium was about $60,000 if policy costs were assumed to be at the
maximum levels guranteed in the policy and earnings were only a constant 6%.
In this, the third year of the policy, he is substantially ahead of all
projections and if the current values only increase at the 6% initially assumed,
and with the original excessive cost assumptions the projected death benefit is
now over $2,150,000, all of which would be tax free.
"No-load" variable life (without the commissions) are now available through some
companies. We chose Ameritas as being the best given their ages 72 and 70.
Hope this helps.
Richard D. Funkhouser
Steven Buss wrote:
> My wife and I are being pitched a "Variable Universal Life" policy. In a
> nutshell, this kind of policy is advertised to allow for after tax investing
> in various mutual fund-like life-insurance investment vehicles for which all
> investment growth is tax-free if certain (easy to meet) conditions are met.
> There are other essential features that make this vehicle attractive but I'm
> already a bit off topic so I don't want to go into it here. There are
> certain and specific mechanisms that allow for this kind of policy to be
> used as a capital accumulation vehicle for retirement and/or child education
> funding. Suffice it to say that it's something like a Roth IRA without the
> yearly dollar limit and without the kind of income cap that makes the Roth
> unavailable to us anyway. It looks pretty legitimate but I had never heard
> of it before this year even though the US congress had set up the
> legislation which makes these policies possible in 1986.
>
> It seems too good to be true....so I'm skeptical. A few questions. Anyone
> have experience with or knowledge of:
>
> - the workings of "Variable Universal Life" policies so that you have an
> opinion about them pro or con?
>
> - the degree to which the investment vehicles actually mirror their real
> market Mutual Fund cousins?
>
> - whether it's possible to use historical data on closes of these
> vehicles to develop a switching strategy for them?
>
> Any other feedback would be helpful.
>
> Please reply privately so as not to take this mailing list more off focus.
> For those interested in replies to this note, send me a note and I'll
> forward them to you.
>
> Steven Buss
> Walnut Creek, CA
> sbuss@xxxxxxxxxxx
> "There's nothing more practical than good theory."
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