Variable Universal Life Insurance????

[Big Time]

What exactly is it? My girlfriend has a "friend" who is a financial advisor who got her to set up a Variable Universal Life Insurance plan with him. I took a look at her Annual Review and was astonished at the fees that she was paying. Below is a breakdown of the review:

Premium Paid: $1,764.00
Insurance Cost: -$271.97
Other Charges: -$506.51
Investmnt Gain: $105.56
----------------------------
Value: $1,091.08

So of the $1,764.00 that she put in/invested, she is paying out a total of $778 in fees, or 44%. Maybe I am looking at it the wrong way because she is paying a premium for the $300k in life insurance (even though she has life insurance through work), but is this the best way for her to be investing her $$? I just don't know much about this particular product, so before I call and give her "friend" and earfull, I need to know what I am talking about.

Would it be better for her to invest that $147 a month into a normal retirement a/c (say a roth IRA) and get a ROI of say 8% (reasonable assumption) over the next 30+ years?

 

[DAREDEVIL]

What exactly is it? My girlfriend has a "friend" who is a financial advisor who got her to set up a Variable Universal Life Insurance plan with him. I took a look at her Annual Review and was astonished at the fees that she was paying. Below is a breakdown of the review:

Premium Paid: $1,764.00
Insurance Cost: -$271.97
Other Charges: -$506.51
Investmnt Gain: $105.56
----------------------------
Value: $1,091.08

So of the $1,764.00 that she put in/invested, she is paying out a total of $778 in fees, or 44%. Maybe I am looking at it the wrong way because she is paying a premium for the $300k in life insurance (even though she has life insurance through work), but is this the best way for her to be investing her $$? I just don't know much about this particular product, so before I call and give her "friend" and earfull, I need to know what I am talking about.

Would it be better for her to invest that $147 a month into a normal retirement a/c (say a roth IRA) and get a ROI of say 8% (reasonable assumption) over the next 30+ years?

Your better of sticking the 174 a month into a savings acc !!!!!!!!!
Just choose a bank that will not go bankruped !!!!:sifone:

 

[Big Time]

Your better of sticking the 174 a month into a savings acc !!!!!!!!!
Just choose a bank that will not go bankruped !!!!:sifone:

I just fail to see how this whole thing is supposed to return any money to you in the end, especially when so much of your premium is going towards fees? Am I missing something here?

Obviously she doesn't make a whole lot of $$, so to her $150 a month is a considerable amount, and especially if it is money that you are not seeing a ROI on. There is a 3k+ termination fee, so she can't get out of it at this time without that out of pocket cost.....I am ready to rip her "friend" a new a$$hole because I'm pretty sure he is seeing at least some of those "fees" that are steady income for him.

 

[Bobcat]

Hey Chris, You might want to post this in the boat insurance area, we have plenty of Insurance People on here that might not visit the Bar area. I'll make sure it doesn't get moved.

 

[HiZ]

Well there are a few ways to look at this!
It's a way to build a Cash Value in Securities, Debt and Equity.
It is like a mutual fund of life insurance that builds by investing
You should see some dividend pay out.
Now the fact that it is life insurance states that in death it pays, so whomever is the benificiary is the name recipient of the payout when the policy matures.
So, the variable part means "securities"
The Unversal part means "flexible premium" Pay in
However there are also riders, contract specifics, and whole life parameters
So, it is really a contract based setting
Universal=Select;premium,investment choice,etc
Whole Life=Set Premium for pay out
It's a balance of the two per say

If this contract is placed in effect and the proposed/selected investment is Not what would best fit the client then Yes there are some Moral issues.
The advisor should always place the best suited policy for what the investors needs are.

This is like a Whole life type of policy with some investing perks.
Basically you pay your entire life a set amount and in the end your beneficiary will get the amount of the policy when it matures/death.
So, what was the point of setting up this policy?
Someone that has limited income and wants to be sure that a dependant will have adequate coverage in the event of physical, financial, or medical death
Children, etc.

 

[Boss252]

I had one and my invester did some fancy paperwork and got me back all of the money I paid in and rolled it into an IRA. then I went and bought Term Life Insurance and it is way cheaper if Life Insurance is what she wants.

 

[Gladhe8er]

Call Mazzeo. He sells this stuff for a living. That's who Steph and I bought from. He'll tell you exactly what is up.

 

[HiZ]

Term life is a set time frame of life insurance
say term to 20 = 20 years of coverage
if it matures(death) it pays the beni.
Small premium, limited to specific time frame

Whole likfe is for "your whole life"
coverage until you pass
No limits and a set premium for the entire policy
At death it pays the beni.
Larger premium, coverage as long as it is paid, for the life of the policy

Universal life means you can adjust your premium rate during the policy
you can contribute a specific amount
That fits your life style, goals, and financial status

Variable means that there are securities involved - stocks, bonds, mutuals, etc
This would allow the policy holder to pick a set of securities
To help the policy grow in Cash value and also to have a pay out
or later in life have an amount that you can use for income.

I hope this helps, I know that my other post was not, after I read it today.

PM for more specifics

 

[Big Time]

Thanks guys...I'm going to digest this and take a closer look at her specific plan, then maybe come back with more questions.