Variable universal life insurance

[girlie racer]

It "appears" like a win-win type of insurance/investment vehicle, but after doing some research, it seems like there are more con's and risks involved. It's a tax-sheltered insurance policy that also allows you to invest in stocks, mutual funds, etc and all capital gains are non-taxable. I also read that the insurer (at retirement age while maintaining the insurance policy) or beneficiary is able to take out the funds tax free.

Is anyone well educated on these or can offer any insight/experience? It seems too good to be true!

Thank you!

[Synaptik]

its only tax sheltered up to the MTAR line, meaning you're capped on how much return you can make through your investments tax free. this line is set by the government.

only your beneficiary will be able to receive the money tax free (aka on your death), you however may withdraw the money anytime, at which you will be taxed on the gain. most people do it during retirement were they are taxed at a lower rate due to lower income. this is tax deferral, not avoidance.

the downside is that this type of insurance have higher administrative costs.

[slammer111]

In Canada VUL is called Universal Life. You've obviously been reading up on a US site.

It's not win-win. If that were the case everyone and his dog would have one. However, if used properly, and IN CERTAIN CASES, they can be a good product to have, and are the best option.

Besides the investment vehicle, it does take care of insurance needs that, contrary to what a big chunk of the public thinks, most people need when they're younger and not when they're older.

I do sell these policies here and there amongst my clients. They're not a be-all-end-all, but they definitely have their place.

If you want more information, PM me.