Advice on Equity Indexed Universal Life Insurance Needed
My husband and I need your help. Should we buy into an Equity Index Universal Life Insurance policy?
We are 35-40 with 2 young children (10 & 2 yrs old) with small life insurance polices via our jobs.
We met someone from talk radio that presented himself as a financial adviser but after weeding through all of the fast talk we realize that he is an... insurance agent from the school of Douglas R. Andrew - Missed Fortune 101.
He convinced us to take the equity out of our home ($70,000) to fund a $120,000 EIUL (after clearing debt) for $786,000 death benefit. Of course, he sold us on the tax-free benefits and the withdrawal benefits, etc. We have not purchased the EIUL yet. Before doing so I've been doing more research on EIULs and want to hear an independent neutral voice on EIULs. I don't like all of the fees and commissions attached to the EIUL and the fee to take a withdrawal, etc.
PLEASE HELP!!!! At this point, with the equity we've taken out of our home, could we do much better by buying term policies on each of us with some form of a cash value life insurance policy, or skip the cash value life insurance policy? We need disability insurance and invest the money where? Max 401k (employer match); ROTH IRA, mutual funds????
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posted by Jeffrey D. Voudrie @ 2:56 AM
3 comments
3 Comments:
Wow!
I do not like this recommendation. Your need is for insurance and you were sold a plan that's to function as an investment. My preference would be to see you use term insurance so that you can buy more death benefit for less money, leave the equity in your home and continue to work on a more traditional investment plan.
That plan would involve setting aside enough money to cover 6 months worth of expenses as a cash reserve, then you can start paying down debt (highest interest rate first).
Along the way you should be maxing out your 401(k), Roth's etc.
What I hate about this is that you probably lost several thousand dollars in refinancing your home. I hope not.
I'm just glad that you took the time to do some research and that you followed that uneasy feeling!
Thank you for your quick response. We are so disappointed, yet relieved that we did not make another mistake by buying the EIUL. Scheduling conflicts have delayed the next phase to fund the EIUL which gave us more time to research. By the way, the agent and his mentor Douglas Andrew even suggest for you to take money out of your 401(k) (on an annual basis to soften the tax penalty) to fund the EIUL.
When I told the agent that I followed the school of Suze Orman & company, he said you shouldn't follow the crowd if you want to invest like wealthy people. To the detractors (you would be one) he says you don't understand the strategy and the nuances to the EIUL. Thanks to a host of financial articles and your advice we will not dig ourselves into a bigger whole.
We will take the money (from our equity) and put ourselves in a better position. We will buy term policies, clear our debt, fund our cash reserve, max out on 401(k), Roth, etc.
We thank you so very much for saving us from giving away more money. I look forward to reading more of your articles.
You're very welcome. Glad I could be of help.
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