MetLife Group Variable Universal Life Insurance (GVUL)

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Topic Author
apple44
Posts: 60
Joined: Tue Feb 19, 2019 3:22 pm

MetLife Group Variable Universal Life Insurance (GVUL)

Post by apple44 » Thu Mar 07, 2019 6:16 pm

Hello,

I'm 35, married with 2 children. I recently received a package from my employer asking me to enroll in the MetLife Group Variable Universal Life (GVUL) Insurance. It has two parts:
1. Basic minimum required coverage: $750,000 (employer-paid)
2. Supplemental coverage: up to $250,000 without medical questions and maximum coverage is $5,000,000.

The main benefits are: (1) permanent and portable; (2) tax-deferred investment opportunities.

The eligible investment funds and fees are below.

Here are My questions:

1. I have a 20-year term life insurance of $1,000,000 with an annual payment of $360.95/year. Now with this basic group coverage, I'll have an additional $750,000 which is required. Should I have any additional supplemental coverage from an insurance perspective?

2. From an investment perspective, should I take advantage of the "tax-deferred investment opportunities" and buy supplemental coverage for investment purposes? If so, how much and which funds would you suggest?

Thank you very much for your time and thoughts!
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Net Total Annual Operating Expenses (as a percentage of average daily net assets):
Brighthouse Funds Trust I -- Class A (Brighthouse/Aberdeen emerging markets equity) 0.94%
Brighthouse Funds Trust II -- Class A (Brighthouse Russell 2000 Index) 0.32%
Deutsche Variable Series I -- Class A (Deutsche CROICI International VIP) 0.90%
Deutsche Variable Series II -- Class A (Deutsche Government Money Market VIP) 0.48%
Fidelity Variable Insurance Products -- Initial Class:
  • Contrafund Portfolio 0.62%
    Equity-Income Portfolio 0.56%
    Freedom 2010 Portfolio 0.52%
    Freedom 2020 Portfolio 0.58%
    Freedom 2030 Portfolio 0.65%
    Freedom 2040 Portfolio 0.68%
    Freedom 2050 Portfolio 0.68%
    Growth Portfolio 0.64%
    Index 500 Portfolio 0.10%
    Mid Cap Portfolio 0.63%
MFS Variable INsurance Trust -- Initial Class:
  • MFS Global Equity Series 0.97%
    MFS Growth Series 0.76%
Putnam Variable Trust -- Class IA:
  • Putnam VT Equity Income Fund 0.57%
    Putnam VT Growth Opportunities Fund 0.66%
    Putnam VT High Yield Fund 0.72%
    Putnam VT Income Fund 0.58%
    Putnam VT Sustainable Leaders Fund 0.67%

T.Rowe Price Equity Series, Inc.:
  • New America Growth Portfolio 0.85%
    Personal Strategy Balanced Portfolio 0.90%
T. Rowe Price Fiexed Income Series, Inc.: Limited-Term Bond Portfolio 0.70%

DarkHelmetII
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by DarkHelmetII » Thu Mar 07, 2019 7:00 pm

Prevailing boglehead philosophy is to avoid VUL like the plague. Your default assumption should be that the more you participate (e.g. above the employer-funded portion) you are paying too much for investments. If you need more life insurance, buy more term. If you have more $$ to invest, dump into into a low-cost tax-efficient index fund like Vanguard S&P 500 fund.

Even the "best" lowest cost VULs from the likes of TIAA-CREF struggle to compete with a low-cost tax efficient index fund + term-life insurance. And in my experience, VUL associated through the employer is worse than what you can simply buy as an individual because a) higher fees, and b) you lose the opportunity to place into the lowest price / lowest risk underwriting tier (assuming you are healthy).
Last edited by DarkHelmetII on Thu Mar 07, 2019 7:15 pm, edited 1 time in total.

Globalviewer58
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Globalviewer58 » Thu Mar 07, 2019 7:13 pm

I would ask whoever sent the memo if term insurance coverage was available as an alternative. The premium is likely a fraction of the VUL premium.

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Stinky
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Stinky » Thu Mar 07, 2019 7:22 pm

Globalviewer58 wrote:
Thu Mar 07, 2019 7:13 pm
I would ask whoever sent the memo if term insurance coverage was available as an alternative. The premium is likely a fraction of the VUL premium.
+1

If VUL is the only option, I would take only the $750k employer provided amount, and invest in the 500 fund.

OP doesn’t give enough information to assess whether $1.75 million of total coverage is enough
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Nate79
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Nate79 » Thu Mar 07, 2019 9:15 pm

Pretty much one of these worst, scammy financial products sold to unsuspecting ignorant consumers. Sad really that your employer is peddling this junk. Take the free minimum and that's it.

inbox788
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by inbox788 » Thu Mar 07, 2019 10:10 pm

Nate79 wrote:
Thu Mar 07, 2019 9:15 pm
Pretty much one of these worst, scammy financial products sold to unsuspecting ignorant consumers. Sad really that your employer is peddling this junk. Take the free minimum and that's it.
Yup! Short answer is take what's free and no more.

The minimum isn't totally free. You have to pay taxes on it and if the premium charged to your company is high enough (do you have a value?) and your tax rate high enough (and worse if it bump you up tax brackets), it could conceivably cost much as a term policy or more. There are threads here asking how NOT to accept "free" employer insurance.
apple44 wrote:
Thu Mar 07, 2019 6:16 pm
The main benefits are: (1) permanent and portable; (2) tax-deferred investment opportunities.
1) do you need permanent insurance? why? [answer is usually NO]
2) are you maxing out all your tax-deferred space? [if not, then you definitely don't need this]

Is this the one of the terrible investment vehicles that known for converting lower long term capital gains taxes into higher ordinary income taxes?

Topic Author
apple44
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by apple44 » Fri Mar 08, 2019 11:58 am

Thank you everyone for your advice!

On the few pieces of paper I received, one footnote says "This coverage is being provided through a taxable employer bonus. Taxes incurred will depend on your individual circumstances." So this insurance is considered a "bonus" which I have to pay taxes on! :oops: I'll ask the administrator how much that "bonus" is and whether I could opt out.

Breakaway72
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Breakaway72 » Fri Mar 08, 2019 12:46 pm

Be careful about the “portability” claim. I have a met life vgul policy that is portable at rates that are double the employee rates. Many of my coworkers were unpleasantly shocked to find this out when they were laid off. My recommendation is take what your employer offers as it is still a bargain after you pay taxes on it. Go to the market and buy your own term policy for any additional needs. The pricing on that policy will truly be portable.

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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Jack FFR1846 » Fri Mar 08, 2019 1:01 pm

Your free insurance is not free. You will be taxed at ordinary income for the premiums that your employer is paying. This is also true if you have employer paid life insurance. I found this last year when I got to pay many hundreds of dollars in taxes for my "free" life insurance.
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Wiggums
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by Wiggums » Fri Mar 08, 2019 1:07 pm

Globalviewer58 wrote:
Thu Mar 07, 2019 7:13 pm
I would ask whoever sent the memo if term insurance coverage was available as an alternative. The premium is likely a fraction of the VUL premium.
+1

Insurance is not a good investment vehicle.

Topic Author
apple44
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Joined: Tue Feb 19, 2019 3:22 pm

Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by apple44 » Fri Mar 08, 2019 5:45 pm

I called the administrator. The answers are: (1) No, I cannot opt out, because we relatively younger people are subsidizing the more senior people at the company. The group rate quoted by MetLife applies to the group only because everyone is required to have it. (2) The tax I may pay is under $50/month.

So that's that. Thanks for everyone's input!

gclancer
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Re: MetLife Group Variable Universal Life Insurance (GVUL)

Post by gclancer » Fri Mar 08, 2019 5:51 pm

apple44 wrote:
Fri Mar 08, 2019 5:45 pm
The tax I may pay is under $50/month.
More than your $1M term policy!

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