One reason he would want you to put your money in a VUL (Variable Universal Life) policy is because he makes higher commissions on a VUL than he would an annuity, mutual funds, stocks, etc.

If you are 29 and single, you do not necessarily have the need for a death benefit which would be associated with a VUL, other than planning ahead for the future.

You also want to be careful with VUL’s because the interest rate that they illustrate to you is not a guaranteed rate. You could get 5 or 10 years down the road and then suddenly you aren’t paying enough premium and have to drastically increase your contribution in order to keep the policy in-force (active).

If I were you, I would put the funds into a Roth IRA. Roth IRA’s are not tax deductible like traditional IRA’s, however they grow tax free and when you take the withdrawals at retirement, they are tax free. There is a $4,000 annual contribution limit to an IRA. (Which could also vary if you have a qualified plan through your employer) The downside to this is that you cannot take the funds out until you are 59 1/2, without paying penalties.

I would definitely research further options before committing to a VUL. If possible, try to find an Independent Financial Advisor in your area. Independent Advisors tend to be focused on your needs rather than pushing only the products that their company offers.

Hope that Helps.

VUL’s are laden with fees. If you need life insurance, buy term insurance to cover your needs. If you need to invest for retirement, invest in good solid mutual funds inside of an IRA. NEVER MIX LIFE INSURANCE WITH INVESTMENTS!!!! In some states it’s actually illegal to even associate VUL’s with retirement plans.

With cash value life insurance, in most cases, if you die the insurance company keeps the savings and pays out the death benefit. If you borrow a loan against the cash value, you have to pay interest on YOUR money. Plus it is deducted from the death benefit at death. So you pay for both savings and protection, but only get one.

I know they can make it sound good, but make sure you do the research.

The FTC even did a study on cash value life insurance scams. They concluded that the average rate of return for a whole life policy was 1.1% after fees and commissions. Yeah they may tell you it averaged 9.2%, but that’s before fees and commissions. Don’t listen to the idiots that sell this crap.

Not to be a jerk, but that financial advisor is an idiot. Actually, he’s not an idiot, he’s trying to make bunch of money by selling you a life insurance policy. I guarantee you he doesn’t own a variable life policy. Maybe he doesn’t have life insurance at all.

This is how a variable life policy work. You pay your premiums. A portion of your premiums goes toward life insurance and the rest is invested in the stock market. There is no guarantees that your cash value will grow. Investments by themselves have their own operating and management fees. Life insurance has its own fees as well. Now you combine these two products together, you are now paying bunch of fees!

If your cash value does grow and you die someday, your beneficiary will be paid a death benefit that is almost equal to the growth of the cash value. If your cash value does poorly, you are guaranteed a minimum death benefit of what you paid for.

If you ever wanted to take money out, you would have to borrow it and pay a loan interest on it. You will affect the death benefit above the guaranteed minimum. If you cancel the policy in the future, surrender charges will apply on the cash value.

I have seen many life policies and I have never seen a life insurance policy getting a great return on the cash value. The highest rate of return I ever saw was 6%. Most of the time, its between 2% to 4%.

If you want life insurance because you have a family that is dependent on your income, get a 20-35 year term insurance. If you want to save for retirement, open a Roth IRA (if you qualify for it). If you have a job that has a 401(k), I would put money into that too. If you put the same investment in a life insurance policy and in an IRA account, the IRA will out perform the life insurance policy.

Anyway, you are making the right choice by considering an IRA. Don’t listen to agent or advisor or anyone who recommends life insurance as a retirement vehicle. Life insurance main purpose is to provide income to your beneficiary so that he/she can maintain the same life style. (though, many people who own life insurance don’t have enough coverage)

HAHAHAHA…..All of the folks that just answered above, particularly the one right above me is lost! They argue for you to do your research yet they have failed to do theirs. There are over 2000 different life insurance companies out there, and there are ONLY three that you should be working with: Northwestern Mutual, MassMutual or NY Life.

The reader above said that he has never seen a dividend above 6%? (I recommend you do your homework). Try reaching for a Northwestern Mutual policy that is currently yielding 7.5%, and their 20 year average is just over 9.2%. Whole life contracts with one of these three companies are fantastic, yet you should not be putting all of your eggs here: roughly 3-7% of your gross income into these policies.

Now, your AXA buddy is pushing a VUL policy because his company return STINKS!! (Thats the homework that you need to do). Ask him, why not a whole life contract, and ask what that number is! VUL’s are not bad, but traditional whole lifes with one of the three companies mentioned above are much better. Please consider, and do not listen to these jabronies down here that are being ill-advised due to the 1,997 other bad companies out there corrupting their view.

Number one, this is a highly questioned topic, try searching for other questions that people have asked before.

Secondly, I’d think that “buy term invest the difference” would make sense for most single 29 year olds, but we don’t really know enough about your situation to give advice. Those that pretend are only pretending or they only take one strategy with all their clients.

Third, If a company is paying 7% now and that dividend rate has gone down in recent years, would you believe that you are more likely to get 9% or 7%? A dividend cannot be guaranteed much less it’s rate. If you took out a money market which can change its rate at any time, would you care what the 20 year average is? I’m surprised Guardian wasn’t on that list by the way.

Fourth, all that Axa guy had to do to be called an “advisor” is to go work for Axa as an agent. The name of their broker-dealer is Axa Advisors for goodness sakes. The term “financial advisor” is unregulated in most circumstances and thereby is fairly meaningless in my book. It sounds like “financial planner”, but it is not the same.

If a VUL is right for you, (please note that the mortality and administration costs can change at the company’s whim and this has nothing to do with the financial strength of the insurance company making your interest rate only half of the story) there are other good options out there besides Axa. Prudential, John Hancock, Transamerica, Pac Life, and lots of others have great policies too. Does that make this guy’s recommendation suspect? Sure, especially since he has a contractual obligation to send a certain amount of business their way and is heavily incentivised beyond that point.

If you want real advice, go see a “financial planner” - one who thinks their advice is worth your money. Otherwise they are just shooting from the hip to try to sell you something.