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Ask Dave

Variable Universal Life Policy?

Dave advises the listener to pay off the house first, then choose something better than a variable universal life policy - an expensive, high-fee way to invest.

A listener asks if he should he do a variable universal life policy if he has no debt except the mortgage and has maxed out all retirement savings.

No.  You should pay off your house before you do any additional investing and make sure you’re only investing 15% in the retirement savings plans. 

The variable universal life policy (VUL) is the latest version of a cash-value life insurance plan.  It’s a mutual fund snuggled next to an annual renewable term life policy (ART).  ARTs go up every year based on your age, which means it is one of the most expensive ways to buy term insurance. 

When you’re paying for both a mutual fund and the ART at the same time your insurance is too expensive and the money that’s supposed to go to your investment goes through the insurance company first.  This means you’re paying tons of unnecessary fees.

It’s an expensive, high-fee way to invest.  Just buy the mutual fund instead.