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Give me scenarios where whole life/VUL would be a good idea to own
Posted on 3/20/24 at 9:00 am
Posted on 3/20/24 at 9:00 am
I've got my 401k, backdoor roth IRA, 529 maxed out. I've got real estate investments and have a separate brokerage account loaded up for my early retirement. Seems like whole/VUL is the next tax advantaged investment I should be making, something I can pass on to my kids. Only other thing I would do with the money is invest in the market, which I'm already heavily invested in as a percentage of my net worth.
8
Posted on 3/20/24 at 9:05 am to JL
HSA?
Posted on 3/20/24 at 9:07 am to JL
Whole life and vUL are not investments, by the way.
If you need life insurance (you don't already have enough term coverage?), you should feel free to consider WL and vUL.
But if you've ever made an unkind comment about brokerage fees and management fees, I would encourage you to put your money elsewhere.
If you need life insurance (you don't already have enough term coverage?), you should feel free to consider WL and vUL.
But if you've ever made an unkind comment about brokerage fees and management fees, I would encourage you to put your money elsewhere.
Posted on 3/20/24 at 9:34 am to JL
If you are loaded and have a sizable estate tax problem.....maybe.
Posted on 3/20/24 at 9:38 am to JL
quote:
something I can pass on to my kids
This would be an ideal scenario for permanent life insurance.
But you don't have to confuse permanent life insurance with anything growing cash values. The more bells and whistles you buy in a life insurance policy, the more expensive the physical (mechanical) cost of the policy will be.
I essentially have a no cash value Universal Life Insurance policy. It is basically a permanent term policy. And because it does not permit access to cash value or cash growth, 100% of the mechanics of the policy are built to sustaining a paid up permanent life insurance benefit (to offset losing social security income for my wife when I die or to pass on a benefit to my kids' families.
Posted on 3/20/24 at 10:05 am to JL
I don't know a lot about the whole life/VUL policies, but something my business advisors keeps trying to sell me on is 2nd to die policies.
Said he picked up two $10M whole life policies, in which he listed each kid as the 2nd person on the policy, at a rate equivalent to a $2M 20-year term-life policy just for himself. Something about the census tables, their ages & health when the policies were taken out.
I haven't researched it because I am not there yet. But since you are asking, and I just had the 5th conversation about it last night, I figured I would throw it out as another option to research since the purpose would be to pass something on to your kids.
And before anyone asks, he does not sell them.
Said he picked up two $10M whole life policies, in which he listed each kid as the 2nd person on the policy, at a rate equivalent to a $2M 20-year term-life policy just for himself. Something about the census tables, their ages & health when the policies were taken out.
I haven't researched it because I am not there yet. But since you are asking, and I just had the 5th conversation about it last night, I figured I would throw it out as another option to research since the purpose would be to pass something on to your kids.
And before anyone asks, he does not sell them.
Posted on 3/20/24 at 10:06 am to JL
quote:
Only other thing I would do with the money is invest in the market
A VUL is an extremely expensive way to invest in the market. You are correct about the tax advantages, but if you really are maxed out on everything else and have rental income as well, does it really seem likely you'd utilize this in retirement?
I mean, if you're some type of mega-millionaire where what you've described isn't going to be enough, then maybe. Otherwise, I'm not sure the tax advantages are so much better than the drag on the portfolio of fees and restrictions of a policy designed in this manner.
If you do want a $10m VUL that you intend to max out, can I sell it to you? Ole Gil could really use that commission!
Posted on 3/20/24 at 12:13 pm to JL
Self employed, maxed out on deferred investments, and make too much for Roth. If you don't fit this, there are better investment vehicles alongside a term policy.
There are ways to roll in short term, long term disability with the Life insurance policy. These are things that can be available to people employed by others that a small business owner doesn't have access to.
In my case, I have one.
I took a while with accountant helping to decide
I took the cost of 20 year term life, short term disability, long term disability, and the cost of a couple of other small riders that I wanted. The overall cost wasnt that far off.
It's not huge but if I make it another 16 years, the growth will be mine tax free. The taxes will be pretty high on my deferred because I don't plan on retiring. I'll still own the business while taking retirement distributions distributions.
I think as a primary retirement vehicle it's not the best. If you fit certain parameters, and you expect your post retirement age taxation to be as high, or higher than it is now, it can be an adjunct to a balanced portfolio.
There are ways to roll in short term, long term disability with the Life insurance policy. These are things that can be available to people employed by others that a small business owner doesn't have access to.
In my case, I have one.
I took a while with accountant helping to decide
I took the cost of 20 year term life, short term disability, long term disability, and the cost of a couple of other small riders that I wanted. The overall cost wasnt that far off.
It's not huge but if I make it another 16 years, the growth will be mine tax free. The taxes will be pretty high on my deferred because I don't plan on retiring. I'll still own the business while taking retirement distributions distributions.
I think as a primary retirement vehicle it's not the best. If you fit certain parameters, and you expect your post retirement age taxation to be as high, or higher than it is now, it can be an adjunct to a balanced portfolio.
Posted on 3/20/24 at 1:41 pm to JL
I think more real estate would be a better investment to pass down to kids. It appreciates over time and you can depreciate it which will help with your taxes.
And when you die the basis will not be zero for your kids, it will be the value at the time of your death and they can keep it or sell it tax free for up to 6 months after your death, from what I understand.
And when you die the basis will not be zero for your kids, it will be the value at the time of your death and they can keep it or sell it tax free for up to 6 months after your death, from what I understand.
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