Cash Value Life Insurance - Variable Universal Life

Variable Universal Life is one of the tougher Cash Value Life Insurance policies to understand. It comes with some unique risks we will cover.

Intro video on cash value life:

Is My IUL Any Good:

Was My Indexed Universal Life (IUL) Designed For Tax Free Retirement Income:

Make sure to avoid the variable universal life insurance (VUL) death spiral!

What do you do with your VUL after riding out one of the nest bull markets in history?

[CashValueLifeInsuranceReviews]

Have you ever seen a VUL enter a death spiral?

[fmtajes]

That first chart showing the risk is really good!

[ezekielmaki]

Thanks for putting this together. Very good explanation.

[Aijemcire]

Great explanation. My wife and I have these policies through farmers, both started them a while ago and caught this bull market that took place in the last decade. I just talked to my wife about what I've been learning about these policies and the death spiral. The answer to your question on the video as to whether I expect the line to continue performing the way it has is, not likely. That leaves me wondering, what you think we should do now? If we drop the policy and we replace them with term, do we loose everything it has earned?

[ghostoferlock]

good video, IF someone is averaging into the market through a VUL, to me, it makes sense to hold the units. The way it was suggested of an account value going down and more units being sold to cover cost of insurance is something I considered some time ago. IF the policy is looked at like a policy and investments, and the insurance costs are deducted from a daily interest, or money market account where there is no volatility, it seems to work better. Sending in a one time deposit for the whole year of insurance, and then averaging in during the year seems to go well. As long as deductions are made from an account or fund that isn't volatile. It's a bit odd that people look at illustrations and think a policy can return 10 % or 12 % each year. IF someone looks at a return of 6 % or 7 % each year, and averages into volatile funds it seems like a reachable idea. IF markets are up, maybe move some of the investments to the daily interest or money market account. Could easily keep from selling units when markets loose some value and redeeming more to pay insurance costs. I think personally markets will do worse in the next ten years than the last ten. Keeping in mind that buying and holding over the last decade and years has really increased accounts.

[emanueliglesias]

Hi, so I just got a VUL it seems like it was a bad idea?

[rayray]

Why are you using only the last 10 years as a reference point to your case against VUL? Shouldn’t you look at a 20-30 year time horizon when evaluating ANY long term vehicle? I feel like the 10 year argument is disingenuous, especially since you can systematically allocate some of your cash value to the fixed account over time. There are many mechanisms in place to hedge against the so called “VUL death spiral” such as switching to a level DB & moving a greater proportion of your allocation to the fixed account over time. But in the end, you should never look at a 10 year holding period when evaluating any long-term investment decision, especially when it comes to life insurance.

[TGPtrev]

Excellent. This is the greatest augmentation to my pre-licensing education. Thank a lot!

[Lylelanley]

Ooooof. You are illustrating 8%? I hope that is purely for the video and not what you are showing potential clients. I have never shown more than 5, keeps from having complaints filed against me when the policy blows up after year 25.

[audreyl]

I have VUL and im looking to change it to an IUL

[sheraldhill]

If you knew when the market would go down or go up you wouldn’t even need insurance on your small island you purchased with the interest from your billion dollar portfolio. Your question about whether the investment will do better or worse isn’t answerable. Terrible premise.