- quote -


Nay - Nay, not when I sold it ! ! ! ! (big grin)
Cal

Cal Lester wrote:
- quote -

Cal,
You're right, as usual. My thinking though is that when something is
described as "tax free" the only part of interest is the potentially
taxable part, meaning the income & gains. The basis of an investment is
always free of tax - whether it's money deposited in a bank, or mutual
fund shares purchased. So that's not unique to an insurance policy, the
unique part is the ability to take out policy loans against the income
portion, without incurring taxes. That can be a great feature but I
think the details of how that's done are often glossed over when VUL is
described as "tax free".

-Tad

Ryan,

I think that Cal meant there is a need for insurance on the parents until
the child is out of college

herlihyboy wrote:
- quote -


Sorry, but you missunderstood (or I was not clear) but I was referring to
Life Insurance on YOUR life (and possibly your wife).


We had a whole life policy on our oldest
- quote -


My sentiments completely

Cal

- quote -

Cal -

Why is there a need for life insurance for my kids? The only expense I
will incur if they unfortunately die is funeral expenses. They aren't
providing income to the household, so I don't need to replace that.
Provided I can pay cash for that, what's the point of carrying life
insurance on them? We had a whole life policy on our oldest child
(he's now 4 1/2) and cancelled it after a couple of years because we
decided we could take the money we were spending (about $10/month), put
it in the market and get a better return.

Our agent tried to spin it as a savings account, but it really didn't
sound that good. I'm interested in your reasons for needing life
insurance on a child.

Ryan

Once again,

Thanks for all the great info. I have scheduled another meeting with my
agent and have a good list of questions for him.

Thanks again all!

Russell

Another footnote, while the scholarship could cover room and board, many
other expenses aren't and the 529 money can be used there.

Also, if your wife needed or wanted to go back for grad school, it could be
redirected there.

"RFulks" <russellfulks[at]sbcglobal.net> wrote in message
news:573987c189d284ef7af5825968283a61[at]localhost.talkaboutinvestments.com...
- quote -

noreplysoccer[at]hotmail.com wrote:
- quote -

Only if you COMBINE it with Life Insurance
Cal Lester CLU

- quote -

RFulks wrote:
- quote -


That is one of the valuable features of ANY U/L contract, is it's
flexibility of premium payment and Death Benefit.
Cal Lester CLU


- quote -

Tad Borek wrote:
- quote -

Not 100% correct. One may WITHDRAW Income Tax Free an amount
up to BASIS (total premiums pain in to date). Any funds withdrawn above
that amount should be taken as a LOAN (income Tax Free) to be repaid
at Death, or from FUTURE basis if possible.

With a young child, there should be a NEED for some Life Insurance at
least untill the child is OUT of college. Sometimes there is even a NEED
for Life Insurance beyond that (at least that is what I have heard).
Cal Lester CLU

Noreplysoccer,

That's a good point, but if I used a 529 instead of a VUL I would also
supplement it with a term insurance policy.

Tad,

That is some more good info. I didn't realize the penalty of a 529 is
waived if she gets a scholarship. I figured I'd need life insurance of
some sort for my whole life. I *thought* that after 25 yrs I could lower
my VUL value to lower my insurance cost.

As I mentioned to Cal in an e-mail, I have a meeting scheduled with my
agent to bring up a lot of these points that weren't addressed initially.
Thank you all for bringing up such good pionts.

Russell

RFulks wrote:
- quote -

Did he tack on..."as long as you keep the insurance policy in force
until the day you die..."? That's a heck of a caveat to calling
something "tax free" and if you don't want or need life insurance for
your whole life this is an extra cost to consider, that might by far
outweigh the tax advantage.

He's correct though, at the moment Section 529 plans are only
tax-deferred, because the "tax free if used for education" part expires
in Dec 2010. Will your daughter be in a high tax bracket when it comes
time to cash in a 529 account to pay for school? Even if the withdrawals
end up taxable the actual taxes might be low, so "tax deferred" might be
good enough.

And that still leaves the alternative of the Coverdell ESA which doesn't
have that expiration date for its tax-free status. The ESA contribution
limits are substantially lower though.

There is also a very real possibility
- quote -

He's wrong, the 529 beneficiary gets a scholarship the penalty is
waived, though you do still pay income taxes on earnings.

I don't know if it's an alternative but you can change the 529
beneficiary as well, within certain limits.

-Tad

but the 529 plan does not guarantee money is available ALWAYS. the
purpose of the VUL, if I understand this concept, is to have the cash
value fund the education expense. If the holder of the VUL dies before
the cash value gets high enough, the insurance portion pays for
college. If the person investing in the 529 plan dies tommorrow, could
the 529 plan fund college in 18 years?

I'm not saying the VUL is or is not the best solution, but it's an
option I read about and makes sense to me. I'm considering this method
myself...

That's a very good point Ryan!

The main reason behind his VUL suggestion was the tax benefits of the VUL.
He mentioned that withdrawls for education expenses from the VUL are not
taxed whereas 529 gains are taxed. There is also a very real possibility
that my daughter will get a scholarship (mom's a national champ basketball
player, A student, and 1/8 Native American) and my agent advised me that
if a 529 is not used for education expenses, I would have to pay a penalty
to withdraw the money.

Hy Russell;
Would you believe "YES or No"......................

VUL (as with any UL) has the unique option of having a Death benefit that INCLUDES
ALL of the accumulated Cash Value Account OR A Death Benefit that ADD's
the CURRENT Accumulated Cash Value Account to the Face Amount..

It is known as OPTION "A" or "B".
Option "A" provides that the Death Benefit IS the Face Amount (less any indebtedness if any).
Option "B" provides that the then CURRENT C/V/A is ADDED to the Face Amount ( less above if any).

The ACTUAL Cost of the Insurance under Option "A" is greatly REDUCED, as the amount
"at risk" is constantly reducing (Face - C/V/A = amount at risk), resulting in generaly higher
savings.
The Actual Cost of Insurance under Option "B" will constantly INCREASE due to that fact
that you are getting OLDER each year, and the RISK remains CONSTANT for the Carrier.

Having said all of that, in the example that you gave, college funding, I would normally advise
my client to take Option "A". The reason being, that the $500K D/B should be sufficient to
cover college funding, and in the event that you do NOT DIE, then you want as little COST
taken from the contract as possible. btw, I would have used U/L rather than V/U/L due to the
fact that V/U/L, although the potential for GAIN is higher, has much greater overall COST's
associated with it than U/L. That is simply my opinion.
Cal Lester CLU


RFulks wrote:
- quote -

Russell -

I can't answer your overfunding question, but I have a suggestion
regarding your insurance agent's recommendation. Before you buy a VUL,
look at the rates of return on your investment of this versus an ESA or
529 Plan. These are basically like education IRAs and I think you
would see a better return on your investment if you purchased level
term insurance and invested the difference in one of these two plans.

Depending on your age, level term is CHEAP. I am 30, healthy, and
don't smoke and I was able to get 400K for about $20/month. Those cash
value plans typically have a horrible rate of return on your investment
versus a traditional IRA (or education IRA in your example).

Just my $.02. Now the insurance salesmen who read this thread can
trash me. ;-)

Ryan

Hey all,

My insurance agent is recommending a VUL for my life insurance and college
savings needs. It seems like a good idea but there is one thing I'm not
sure about.

Assume a $500K fixed insurance VUL for example. If the insured has been
overfunding and the overfunded balance is say $400K, when the insured
dies, does the spouse receive $500K insurance plus the $400K overfunded
for a total of $900K, or just the $500K insurance value?

Thanks for your insight.

Sincerely,

Russell