Is a variable universal life insurance policy a good financial deal?
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Asked June 18, 2012
All things considered, life insurance is a good deal, without qualifying it according to current market conditions. The purpose of insurance is to protect your financial interests or the financial security of your family, and the behavior of markets will not alter the face value of your policies. It sounds as though you are looking at your insurance policy as a financial tool or even an entry into playing the markets, but that is not the primary purpose of life insurance.
A variable universal life insurance policy provides you with options that could cause your cash value to increase, but it is never a good idea to count on making a gain from life insurance policies of any sort. You have the potential to earn a nice return on the investment, but the only guarantee, even when the markets are soaring, is that the policy will pay out a minimum value on maturity. Using a variable universal life policy as a way to make a lot of money is generally futile unless the policy is paid for in one lump sum during a period of essentially bottomed-out markets, because that would create enough cash value in the account to make sizable investments for the long term.
Whether a variable universal policy is right for you is a different question. If your primary concern is to put your children through college, getting term life insurance quotes for a policy would probably be less expensive. And if your only interest is to pay your final expenses when you pass away, a funeral expense policy would take care of your needs at a much lower cost and without the medical examination required by most permanent life insurance policies.
Answered June 18, 2012 by Anonymous