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[quote author="Shooby" date=1213924244]I met with a financial adviser yesterday and told her my goal was to buy another home in 5 years and needed a vehicle to stow my cash. She recommended a Variable universal life policy putting $650/month into the account.



Beats ING Direct I guess</blockquote>


Shoob - <strong>PLEASE</strong> get some advice from someone you trust and has no biased interest in your investment dollars before you go throwing your money in the toilet. Most financial advisers are insurance salesmen.
 
[quote author="Shooby" date=1213929846]So...you guys are saying I should ditch the VUL and my financial adviser altogether and go to Vanguard.</blockquote>


The great thing about a VUL is the commission for the "financial adviser". I am saying you need to get financial advice from someone who can give you a non-biased opinion and has your best interest at heart. Do you have any family members who are financially savy? Or friends? And read some books and internet junk on these subjects. Wasn't it Malcolm Forbes who said, "With all thy getting, get understanding"?
 
Fee-only advisor.



seriously.



If you are going to invest $33k over 5 years, it is worth it to pay someone $300 for two hours of analysis.



If you just can't do that, and have no trusted free advisor in your family/friends, then yes, vanguard
 
[quote author="Shooby" date=1213928625]Yeah that's what I was suspecting. A VUL seemed like the last thing to do, but the way she explained it was that I can borrow from the cash value of the policy, which if I put $650 a month it would be worth over 33K in 5 years which I can take out tax free and use towards a down payment.</blockquote>


$650/month * 5 years * 12 months/year = $39,000.



$33,000 (value) - $39,000 (premiums) = -$6000. In other words, you're paying $6000 over five years for the life insurance, plus the lost growth. reality is below.



$650/month * 5 years *12 months/year @ 3% in a money market = $42,020.36.



<strong>Value over VUL $9,020.36. Roughly $1800/year for the life insurance.</strong>

$42,020.06 - $39,000 (payments) = $3,020.36.



In CDs at 5% it's worth $44,000.



at 8% return in blended invetments like Vanguard funds, the expected value is $47,759.96



get your life insurance through your job.
 
I guess i'm just trying to weigh if a VUL is a prudent investment considering my short term goals of saving for a house. I told her that's what my goal was, was to hve enough down to buy a SFH in 5 years. And she whipped that out. With cash value readily available to withdraw, seemed like a good choice at the time.



What do you guys use for this type of goal? I should probably lower my monthly contribution to the VUL and put it somewhere else.
 
[quote author="No_Such_Reality" date=1213931885][quote author="Shooby" date=1213928625]Yeah that's what I was suspecting. A VUL seemed like the last thing to do, but the way she explained it was that I can borrow from the cash value of the policy, which if I put $650 a month it would be worth over 33K in 5 years which I can take out tax free and use towards a down payment.</blockquote>


$650/month * 5 years * 12 months/year = $39,000.



$33,000 (value) - $39,000 (premiums) = -$6000. In other words, you're paying $6000 over five years for the life insurance, plus the lost growth. reality is below.



$650/month * 5 years *12 months/year @ 3% in a money market = $42,020.36.



<strong>Value over VUL $9,020.36. Roughly $1800/year for the life insurance.</strong>

$42,020.06 - $39,000 (payments) = $3,020.36.



In CDs at 5% it's worth $44,000.



at 8% return in blended invetments like Vanguard funds, the expected value is $47,759.96



get your life insurance through your job.</blockquote>






Thank you! This is exactly what I was thinking... why would you ever consider paying someone $6,000 towards an investment? The math is very simple...



The only reason anyone needs life insurance is if they have someone they need to provide for following their passing (such as young children) and in this case buy term life... more coverage and cheap. Otherwise, you don't need life insurance. And life insurance IS NOT AN INVESTMENT.
 
[quote author="Shooby" date=1213932198]I guess i'm just trying to weigh if a VUL is a prudent investment considering my short term goals of saving for a house. I told her that's what my goal was, was to hve enough down to buy a SFH in 5 years. And she whipped that out. With cash value readily available to withdraw, seemed like a good choice at the time.



What do you guys use for this type of goal? I should probably lower my monthly contribution to the VUL and put it somewhere else.</blockquote>




Geeze.... even an eTrade checking account pays 3.25% APY and talk about having access to your money... it's a checking account!



<a href="https://us.etrade.com/e/t/banking/checking">eTrade Checking</a>
 
yeah VUL is a bad idea IMO as well. Al ot of people are selling it it and making this a great investment because its tax free..but they dont divulge any of the commissions they actually get and also, the return is not "guarantee"......that's the catch.



i read in a financial planning book that you shouldn't mix investment and insurance together . if you want insurance get a regular term life insurance which is problably 30 bucks a month for an average mid 30s person.
 
I guess no one is really interested in talking about the REAL PLACE for making MAD MONEY! That place is investing in Canada (I call it the land of Natural Resources) and developed Asian Countries (Japan, Singapore, and Hong Kong) in the next ten years. Suprisingly, out of all countries, Canada is really well positioned for the future global market. I currently own 0%, did you hear me, yes 0% in the U.S. stock market as I think prices here are still out of whack, and I just don't trust the numbers with all the fraud and scandals happening in some of these U.S. companies that we, Americans are supposed to trust: Arthur Anderson, Enron, Worldcom, Bear Sterns, and list goes on and on.



"Two former Bear Stearns hedge fund managers were hauled into jail Thursday and charged with lying to investors about the collapse of the subprime mortgage market, perhaps signaling the start of a wave of prosecutions arising from the housing meltdown."



Yeah, I agree. I don't trust the guys who sell life insurance. There was this one guy who i met in the air plane who was trying to sell me Life Insurance from World Financial Group. This guy must of been making some serious commission taking Carribean cruises and Hawaiian vacations practically every other month. He invited me to come see him speak in one of those brain washing seminars. It seemed like some sort of pyramid scheme where if you sell so many life insurances a month you can win a Rolex, all paid 7 day vacation to Hawaii, and even a chance to win a brand new 500 series BMW. You have to wonder where all this money is coming from?



He stopped calling me when I told him that i had no interest in buying his life insurance, and being part of his pyramid network.



Panda
 
[quote author="Girl In the OC" date=1213941733]Thank you! This is exactly what I was thinking... why would you ever consider paying someone $6,000 towards an investment? The math is very simple...



The only reason anyone needs life insurance is if they have someone they need to provide for following their passing (such as young children) and in this case buy term life... more coverage and cheap. Otherwise, you don't need life insurance. And life insurance IS NOT AN INVESTMENT.</blockquote>


Be careful, VUL can be a good investment vehicule for some people. I don't know enough of the details and tax reguilations, but I believe it can be a good thing is you are already max your 401(k) and IRA every year AND that you need to buy life insurance.



I agree it is probably not a good idea for this specific case, but don't overgeneralize.



Life insurance is not ONLY good if you have young children. It is good for many many reasons. For one, if you are a single-income family, I hope you have a lot of life insurance to give enough time to your spouse to find a decent job if you pass away. Also, even if your kids are in their teens, they still need to go to college. You should have life insurance to cover your mortgage. What if your parents depend on you for their medical bills, etc.
 
[quote author="PANDA" date=1213946391]I guess no one is really interested in talking about the REAL PLACE for making MAD MONEY! That place is investing in Canada and developed Asian Countries (Japan, Singapore, and Hong Kong) in the next ten years. I currently own 0%, did you hear me, yes 0% in the U.S. stock market as I think prices here are still out of whack, and I just don't trust the numbers.</blockquote>


Maybe, maybe not... Canada natural ressources seem very valuable, but you would think the market already takes that into account. You can make a bet that the market undervalues Canada's potential, but who knows? Same for Asian country's potential economic boom well underway, when will it stop? Hard to be sure.



There are some stocks in the US that are very good and safe bets with global exposure.
 
[quote author="Roo" date=1213948086][quote author="Girl In the OC" date=1213941733]Thank you! This is exactly what I was thinking... why would you ever consider paying someone $6,000 towards an investment? The math is very simple...



The only reason anyone needs life insurance is if they have someone they need to provide for following their passing (such as young children) and in this case buy term life... more coverage and cheap. Otherwise, you don't need life insurance. And life insurance IS NOT AN INVESTMENT.</blockquote>


Be careful, VUL can be a good investment vehicule for some people. I don't know enough of the details and tax reguilations, but I believe it can be a good thing is you are already max your 401(k) and IRA every year AND that you need to buy life insurance.



I agree it is probably not a good idea for this specific case, but don't overgeneralize.



Life insurance is not ONLY good if you have young children. It is good for many many reasons. For one, if you are a single-income family, I hope you have a lot of life insurance to give enough time to your spouse to find a decent job if you pass away. Also, even if your kids are in their teens, they still need to go to college. You should have life insurance to cover your mortgage. What if your parents depend on you for their medical bills, etc.</blockquote>


Roo, you sound just like the guy I met on the plane. Trying to give me the FEAR sales pitch to sell me life insurance (VUL). Who is going to take care of your children? Who is going take care of your wife? Who is going to take care of your medical bills? Who is going to take care of your parents? when PANDA DIES????? "When Panda gets run over by a rain deer"



Seriously, this guy was really funny. He intentionally fiddled around in his 700 series BMW keys and his $30,000 gold Rolex watch in front of my face, and made sure he wanted me to know how filthy rich he is, by inviting me to his office. Had several huge paintings of himself in his office. Constantly recruiting poor innocent 23 - 25 year olds saying, "How would you like to be me one day?" This guy was really full of himself.



Roo, Don't tell me that you are one of those Life insurance brokers at World Financial Group.
 
[quote author="PANDA" date=1213948676][quote author="Roo" date=1213948086][quote author="Girl In the OC" date=1213941733]Thank you! This is exactly what I was thinking... why would you ever consider paying someone $6,000 towards an investment? The math is very simple...



The only reason anyone needs life insurance is if they have someone they need to provide for following their passing (such as young children) and in this case buy term life... more coverage and cheap. Otherwise, you don't need life insurance. And life insurance IS NOT AN INVESTMENT.</blockquote>


Be careful, VUL can be a good investment vehicule for some people. I don't know enough of the details and tax reguilations, but I believe it can be a good thing is you are already max your 401(k) and IRA every year AND that you need to buy life insurance.



I agree it is probably not a good idea for this specific case, but don't overgeneralize.



Life insurance is not ONLY good if you have young children. It is good for many many reasons. For one, if you are a single-income family, I hope you have a lot of life insurance to give enough time to your spouse to find a decent job if you pass away. Also, even if your kids are in their teens, they still need to go to college. You should have life insurance to cover your mortgage. What if your parents depend on you for their medical bills, etc.</blockquote>


Roo, you sound just like the guy I met on the plane. Trying to give me the FEAR sales pitch to sell me life insurance (VUL). Who is going to take care of your children? Who is going take care of your wife? Who is going to take care of your medical bills? Who is going to take care of your parents? when PANDA DIES????? "When Panda gets run over by a rain deer"



Seriously, this guy was really funny. He intentionally fiddled around in his 700 series BMW keys and his $30,000 gold Rolex watch in front of my face, and made sure he wanted me to know how filthy rich he is, by inviting me to his office. Had several huge paintings of himself in his office. Constantly recruiting poor innocent 23 - 25 year olds saying, "How would you like to be me one day?" This guy was really full of himself.



Roo, Don't tell me that you are one of those Life insurance brokers at World Financial Group.</blockquote>


Don't worry, I'm not of those and I have no vested interest in any life insurance products. I am really trying to explain why life insurance is important.



I hope you don't underestimate the danger and potential impact some unfortunate events can have on your family. Hopefully, you'll never need to use that insurance, but it's good to know it's there for your loved ones.
 
[quote author="PANDA" date=1213948676][quote author="Roo" date=1213948086][quote author="Girl In the OC" date=1213941733]Thank you! This is exactly what I was thinking... why would you ever consider paying someone $6,000 towards an investment? The math is very simple...



The only reason anyone needs life insurance is if they have someone they need to provide for following their passing (such as young children) and in this case buy term life... more coverage and cheap. Otherwise, you don't need life insurance. And life insurance IS NOT AN INVESTMENT.</blockquote>


Be careful, VUL can be a good investment vehicule for some people. I don't know enough of the details and tax reguilations, but I believe it can be a good thing is you are already max your 401(k) and IRA every year AND that you need to buy life insurance.



I agree it is probably not a good idea for this specific case, but don't overgeneralize.



Life insurance is not ONLY good if you have young children. It is good for many many reasons. For one, if you are a single-income family, I hope you have a lot of life insurance to give enough time to your spouse to find a decent job if you pass away. Also, even if your kids are in their teens, they still need to go to college. You should have life insurance to cover your mortgage. What if your parents depend on you for their medical bills, etc.</blockquote>


Roo, you sound just like the guy I met on the plane. Trying to give me the FEAR sales pitch to sell me life insurance (VUL). Who is going to take care of your children? Who is going take care of your wife? Who is going to take care of your medical bills? Who is going to take care of your parents? when PANDA DIES????? "When Panda gets run over by a rain deer"



Seriously, this guy was really funny. He intentionally fiddled around in his 700 series BMW keys and his $30,000 gold Rolex watch in front of my face, and made sure he wanted me to know how filthy rich he is, by inviting me to his office. Had several huge paintings of himself in his office. Constantly recruiting poor innocent 23 - 25 year olds saying, "How would you like to be me one day?" This guy was really full of himself.



Roo, Don't tell me that you are one of those Life insurance brokers at World Financial Group.</blockquote>
All that stuff can be leased or bought on credit.


I have term life insurance. VUL is a rip off.
 
Yeah, I agree. I don't trust the guys who sell life insurance. There was this one guy who i met in the air plane who was trying to sell me Life Insurance from World Financial Group. This guy must of been making some serious commission taking Carribean cruises and Hawaiian vacations practically every other month. He invited me to come see him speak in one of those brain washing seminars. It seemed like some sort of pyramid scheme where if you sell so many life insurances a month you can win a Rolex, all paid 7 day vacation to Hawaii, and even a chance to win a brand new 500 series BMW. You have to wonder where all this money is coming from?



He stopped calling me when I told him that i had no interest in buying his life insurance, and being part of his pyramid network.



Panda</blockquote>


World Financial Group, they're into life insurance now? A couple of years ago, they approached me regarding real estate and lending. Sleazy guys, I tell you. They told me WFG is part of that pyramid scheme Amway.
 
I guess the only problem I had with this situation is that I am 25 years old, do not have a family nor am i married, and she was saying I shoudl start a life insurance policy. For who to benefit right now if i die? I understand if i get married in 3-5 years I should start thinking about it.



I went in there with a goal of saving enough cash to put a down on a single family home in 5 years. I even asked about stuff like Roth's, but she said a VUL was better. That got me thinking if this was for her best interests or mine. I understand she needs to make a living, but there is a fine line between helping a client's needs and conning a young adult out of his hard earned money.
 
Getting life insurance early (whole life, that is), can be good with certain policies. You can add to it later without re-underwriting in many cases, and earnings in the policy grow tax-free.



I have a family, but got a whole life insurance policy when I first turned 18. My premium is low as a result, and I can borrow against it if necessary. I didn't go with a company I hadn't heard of, though - I used Northwest Mutual.



Here's an example:



Say you get some strange cancer at age 30. Try getting life insurance at that point, and they will turn you down outright or you'll have to pay a HUGE premium. The disease doesn't even have to be cancer. Anything that can shorten your life expectancy will cause your premium to rise.
 
[quote author="Shooby" date=1214008724]I guess the only problem I had with this situation is that I am 25 years old, do not have a family nor am i married, and she was saying I shoudl start a life insurance policy. For who to benefit right now if i die? I understand if i get married in 3-5 years I should start thinking about it.



I went in there with a goal of saving enough cash to put a down on a single family home in 5 years. I even asked about stuff like Roth's, but she said a VUL was better. That got me thinking if this was for her best interests or mine. I understand she needs to make a living, but there is a fine line between helping a client's needs and conning a young adult out of his hard earned money.</blockquote>


Shoob - It is not a fine line. It is a huge chasm. Run, don't walk away from this "financial advisor". Open your Roth. Gosh, you are twenty five? Open your Roth. Not for your down payment, but a Roth at your age is an incredible thing. There is nothing wrong with life insurance at your age. You will probably have a family some day and you can lock in a great rate now, but get life insurance, (term), not a policy which claims to be life insurance <strong>and</strong> a savings account, but actually does neither well. Again, the only thing a VUL does well is line the pockets of the salesperson. How much money does she make if you open a Roth with Vanguard? And start investing in index funds? None.
 
Thanks for the advice. I have decided to cancel the VUL and will let my adviser know i plan on doing this myself. I don't want to give up such a huge chunk of my savings for the advice of someone who's looking out for themselves. Can't trust anyone in the financial "advising" industry.



Will look into Vanguard and opening up a Roth.
 
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