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.
ANSWER:
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.

Dave Ramsey recommends term life insurance policies because they offer the most money after death as well as the lowest monthly payments. Dave Ramsey also recommends a 20 or 30 year term. If you have “savings plan” type policy (Universal Life, etc) cash it in and get a Term Life policy. Life insurance policies are not a good savings plan.

You might be thinking, what happens after the twenty or thirty years? The idea behind using a term life insurance policy verses other types is that with in the 20 or 30 years you should be gaining financial freedom. You should be out of debt, have a retirement plan, house paid off and gaining monetary wealth by long term investing.

Visit lifeinsure.com for quote on term life insurance policies. LifeInsure.com offers an easy to use life insurance quotes calculator. You can get a full explanation of term life insurance or you can watch the video they have available. Don’t waist your time with any other type of life insurance policy, term life is the best.