re: Over Funding Life Insurance vs. Roth IRA

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Now that's what I'm looking for. Good information guys. I am going to meet with my agent on Monday to discuss this. This is my plan: 1) Decrease the contributions in my 401K (Still maintaining a 10% contribution) 2) Buy a VUL policy with small death benefit (I think I am already sufficiently covered through other policies and work policies) 3) Over fund the policy with the decreased contributions of the 401K. 4) I like the disability option as mentioned by another poster. 5) I'm skeptical of the fees and increased cost of mutual funds. I think the ability to grow it tax free is a huge advantage. I can't predict the future obviously but when I retire in 25+ years I can only imagine what the tax rate will be like. The US government has to find a way to pay down the 14 trillion in debt. I also like the ability to get to my money without taxes or penalties in case of emergency.

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- Be sure to check cost of disability rider and type of disability rider. Some riders will only pay the cost of insurance. Others will actually pay the "scheduled" premium. Scheduled premium meaning the premium suggested by the company to keep the policy enforced for a certain time periods, making various assumptions for the costs withini the policy. Make sure you understand the difference. I am almost postive the agent won't.

- Don't MEC the policy. Make sure you understand exactly the dollar premium limits. Making the policy a Modified Endowment Contract by paying too much in premiums will totally change the advantages of this plan.

- If the agent says the investments inside the Variable UL are mutual funds, he is wrong. They are separate accounts. These separate accounts may have similar names to their mutal fund counterparts, but the fee structure can (and probably are) different. Make sure you are comparing the correct fees and cost.

If fact, if the agent is offering you a VUL as a term insurance/mutual fund tax savings combo, then you need to read and research more. It is not. The cost of insurance in a VUL is much higer than term insurance. There are many valid reasons why, but understand it is different. Same with the mutal fund and separate account info from above.


Be warned: The government has been looking at cash value life insurance and its tax deferred/tax free income features for a long time. There is no guarantee the insurance lobby can hold off the U.S. government's search for dollars forever nor is there a guarantee that existing policies will be grandfathered in.

Be warned x 2: You are getting advice from a public forum with aliases.

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5) I'm skeptical of the fees and increased cost of mutual funds.

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Why not pick an Index fund then? If you can't handle .1% in fees I dont know what to tell you.