Hi all...glad to find this site but now disgusted with myself!

[FIREd]

Drives me nuts when Amerprise reps sell insurance as a retirement funding mechanism..................

That's how they sold it to us. We were maxing out our retirement accounts, and it was a way for us to save more retirement money in a tax-deferred account. Turns out, we never, ever made any money with the VULs to defer taxes on...

But the glossy brochure sure looked pretty!!!

 

[ziggy29]

That's how they sold it to us. We were maxing out our retirement accounts, and it was a way for us to save more retirement money in a tax-deferred account. Turns out, we never, ever made any money with the VULs to defer taxes on...

And the thing is, from the standpoint of additional tax deferral *and* (in some states) asset protection, once you've maxed out all 401K and IRA options, the combination of term life insurance and a low-cost variable annuity (such as Vanguard's) is ***much*** better than any VUL product I've seen.

 

[FinanceDude]

And the thing is, from the standpoint of additional tax deferral *and* (in some states) asset protection, once you've maxed out all 401K and IRA options, the combination of term life insurance and a low-cost variable annuity (such as Vanguard's) is ***much*** better than any VUL product I've seen.

Actually, building up a non-qualified tax-efficient portfolio is the way I would proceed.

Ultra High Net Worth folks buy a lot of cash value insurance, but use it as an estate planning tool. Those folks are usually $20 million and above..........so they have estate planning issues in many cases. To apply that same mentality to folks under the estate tax limits is not being a fidcuciary...........

 

[ziggy29]

Actually, building up a non-qualified tax-efficient portfolio is the way I would proceed.

I would agree in for most folks, but that's why I qualified it with the comment about asset protection (and it's relevant for folks already stuck in a VUL product). That's particularly true for high-worth individuals and folks in occupations likely to be sued. For example, here in Texas (also Florida and Oklahoma) there is a virtually unlimited protection from judgments and creditors in products like whole life, VULs and annuity products. Taxable brokerage accounts are vulnerable to being seized here, though.

If asset protection was a major concern to me, the VA might make some sense once other protected accounts like IRAs and 401Ks were maxed, but I don't think VUL *ever* does. Plus at least a low cost VA is a reasonable "escape hatch" for those already trapped in "VUL Hell" as Lisa is.

(Having said that, for estate planning under the estate tax exemption limits, there aren't many better deals than the step up in basis for appreciated stock that you get from stocks held for a long time in an ordinary taxable account.)

 

[FinanceDude]

I would agree in for most folks, but that's why I qualified it with the comment about asset protection (and it's relevant for folks already stuck in a VUL product). That's particularly true for high-worth individuals and folks in occupations likely to be sued. For example, here in Texas (also Florida and Oklahoma) there is a virtually unlimited protection from judgments and creditors in products like whole life, VULs and annuity products. Taxable brokerage accounts are vulnerable to being seized here, though.

If asset protection was a major concern to me, the VA might make some sense once other protected accounts like IRAs and 401Ks were maxed, but I don't think VUL *ever* does. Plus at least a low cost VA is a reasonable "escape hatch" for those already trapped in "VUL Hell" as Lisa is.

(Having said that, for estate planning under the estate tax exemption limits, there aren't many better deals than the step up in basis for appreciated stock that you get from stocks held for a long time in an ordinary taxable account.)

Folks in occupations likely to get sued should have proper E&O or malpractice insurance to cover them. Similarly, folks should have a minimum of $2 million in umbrella coverage as part of their financial house.............

 

[ziggy29]

Folks in occupations likely to get sued should have proper E&O or malpractice insurance to cover them. Similarly, folks should have a minimum of $2 million in umbrella coverage as part of their financial house.............

Agreed. But if they have $5 million in coverage, what's to say they won't be sued for $10 million? We've seen some pretty wacky jury awards (many of them, I assume, are reduced or overturned on appeal). I would agree that we're dealing with low odds here, but it is possible and some people may lose sleep knowing it's possible.

Some people want to bullet proof their asset protection as much as they can, and there's no way to buy an umbrella or a professional liability insurance policy with "unlimited" coverage. So shielding some of your portfolio from being seized is a valid tactic in a few cases (and in a few states). Maybe they are likely better off in a taxable account that is vulnerable to an (unlikely) event where the judgment exceeds their insurance limits, but not *all* of financial planning is by the numbers. The financial plan that's optimal in the average or typical case isn't much good if the client isn't comfortable with the leftover risks they are exposed to. And sometimes no amount of "running the numbers" will convince them otherwise.