Happy nearly new year! I found out my parents have had a variable universal life policy since my early childhood and have been paying on it for roughly 30 years. I should have taken this over earlier, yes, but just found out about it. My question is essentially what should I do with it now? Financial/retirement background…large student loan burden (going for PSLF), manageable mortgage, max 403b/457, backdoor roth, and HSA currently. Interested in other areas to put money outside of a taxable brokerage, hence the debate about keeping the VUL. Have appropriate level of term life, LTD, umbrella/home/auto FWIW.
Currently, cost is ~$250 annually, current cash value ~$4000, death benefit ~$75,000. As of the last statement last year the costs were: mortality charge $75, administrative charges $58, product charges $115; and $300 of investment gain.
First thing I need to do is contact the policy holder and get it switched to me and ask for a policy in force illustration. Should get this done next week.
My questions are the following: 1. Based on me currently maxing my available retirement options and plans to handle my other debts, is there value in keeping this policy? I am from the school of not mixing insurance and investing, thus did not seek out a permanent policy on my own, however now that I’ve had this in place is there a utility outside of death benefit for me? 2. Could/should I over pay premiums to increase the cash value? 3. Unfortunately, the APR on a loan from the policy is ~7.5%. If I get to say, 10k cash value, can I take a loan out and then cancel the policy? 4. Again, i’m in my 30s, have a level T30 plan of appropriate coverage, and plan to have immediate end of life costs covered if my term lapses prior to kicking the bucket, so wont necessarily need the death benefit of this policy. However, I would be willing to keep it around for the death benefit/investment vehicle.
I’ve done a fair amount of lurking around here, bogleheads, WCI, etc and needless to say I know there is no love for VUL/permanent policies. However, I’m thinking my situation may be a little different given the longevity of the policy and currently maxing non taxable brokerage retirement options.
Appreciate any insight, thoughts, recommendations, etc.
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