AXA Advisor - VUL and Term Insurance

[oinkyboinky]

Background:

Fiance and I are getting married (each 29)

160k salary each.

Maxing out 401ks, IRAS, and Roth IRAS.

Currently, we've been following the 3 fund portfolio (VTSAX, VTIAX, bonds)

Situation:

We saw a financial advisor at AXA who spent about 6 hours with us over 3 meetings analyzing all of our accounts, giving advice on rental properties, work benefits, and asking questions about risk tolerance. I also told him about plans to do backdoor roth IRA conversions and mega backdoors. I really liked his approach of fully understanding our situation before recommending any products.

From statements we made, he inferred that we need about 2 million of life insurance (1 million to pay off mortgages, and 1 million for other stuff).

His proposal involves 20 year term insurance (1.5 million death benefit, to cover mortgages) and a VUL policy that we can contribute to instead of doing backdoor roth contributions.

We really like him and the advice he's given so far; I'm considering letting him manage all of our assets long term (just to centralize them and have someone that knows our big picture), as he's also good friends with our tax person and they can share info. The asset\tax situation can get tricky, since we have an LLC, S-Corp, two W2 jobs, and a 1099 job. We're also looking to buy more rental properties.

The complexity is mainly why I'm considering hiring an advisor.

My only concerns are those that I've read on Bogleheads regarding insurance salesman (can a VUL be good in my case?) and advisor fees (1% of assets managed per year).

Questions:

How do I decide if the advice he gives is worth the fee? What do I need to find out about the term insurance and VUL to make sure it's a good idea?

Note, I realize that most here do not want to mix "insurance and investments," however, I'm wondering if this can be a good idea in my specific case.

Any help appreciated, but let's stay away from the "it's a VUL so run" responses.

Let me know why

Cheers

[rterickson]

If you need life insurance, level term is a good way to go. You do not need VUL which will cost a lot and generate a nice commission for the "advisor".

Your three fund portfolio is a rock solid approach. Why would pay AUM fees for an inferior alternative?

[Wiggums]

VUL (Variable universal life insurance) - Investments and insurance is a horrible idea. I already don’t like your FA.

I hold the three fund portfolio and we earned about the same income. Low cost index funds will serve you well.

I would not buy anything but term insurance.

It would be helpful to know more about your debt. It sounds like you have a lot.

[lakpr]

DO NOT INVEST IN VUL!!!

Variable Universal Life Insurance, basically, is an investment vehicle where the death benefit amount is variable, based on the investment returns. But what happens is that, when you contribute $10k into the fund, for example, some $800 is taken out for "mortality charges" and other expenses. Worse, you cannot withdraw from this when you have a need. You can only "take a loan" against that VUL, and the loan would start accruing interest charges, and that interest starts eating away at your money.

Also, it's my understanding that if you do any "withdrawal" (meaning actual withdrawal and not a "loan") from the account, it's taken as "gains" withdrawal first before you ever reach the capital. And that money is considered ordinary income, unlike taxable account where the capital gains held long term are taxed at much preferable lower rates than your ordinary income tax bracket.

Not to mention the steep surrender charges you will face. A "withdrawal" from the account is actually a partial surrender.

============

The $2 million in life insurance policy does sound right. If you do want that level of coverage, then buy the darn $2m coverage and pay the premiums. Shop for lower rates, compare the rates the insurance agent quotes with what you would get for a level-premium term policy on https://www.term4sale.com/

But do not get sucked into investing with this AXA guy or his Variable Universal Life policy. At least you have been warned...

[oinkyboinky]

If you need life insurance, level term is a good way to go. You do not need VUL which will cost a lot and generate a nice commission for the "advisor".

He has a 20 year term policy for the mortgages.

The rationale for the VUL was to have some life insurance after the 20 year term ends, and also to provide an additional "roth like" bucket.

Your three fund portfolio is a rock solid approach. Why would pay AUM fees for an inferior alternative?

The question I'm trying to answer

Our asset\tax situation is getting complex, and will only get more complex as time goes on.

I was wondering if it would be worth the 1% fee to have someone that knows our entire financial situation and can help make changes and give advice along the way.

What do you think about that?

[capjak]

Do you really need life insurance? If in the unlikely event one of you should pass, would the other not be able to handle the debt? I would think life insurance would be needed if you had children or one of you depended on the other's salary to live in the case of an early passing.

I have looked at universal life in the past and I can not see how it is of benefit over the 3 funds you already have. I would stick with term life (minimum needed) and the three funds you already have and I do not believe you need a Financial Advisor.

You and your future spouse should determine how to invest etc... moving forward, however as that is very important to collaborate on as the overall investments will be combined and should be invested as 1 whole and not 2 individuals separately......

[lakpr]

The rationale for the VUL was to have some life insurance after the 20 year term ends, and also to provide an additional "roth like" bucket.

You can stack the term life insurance policies, you know?
- One 20 year level term policy (which would pay off your mortgage should something happen to you), for $1.5 million
- One 30 year level term policy, for $500k
Total = $2 million, the $500k insurance will remain until 30 years from now, providing you coverage even after mortgage is paid off.

You do realize that the growth in the VUL is NOT "roth-like", don't you? Please see my previous response ...

Our asset\tax situation is getting complex, and will only get more complex as time goes on.

I was wondering if it would be worth the 1% fee to have someone that knows our entire financial situation and can help make changes and give advice along the way.

As the previous poster said, there's no substitute to learning to manage investments on your own. Post your questions on this forum, you can get free help and advice. If there is really a complex situation that cannot be answered on this forum, people will tell you that as well. Only then, try to seek a professional opinion from a advice-only advisor, not someone who gets compensated by a percentage of your investments.

[KESP]

Those of us in school systems have had to suffer for years with AXA. Their products are high-priced and I feel like no matter what they are selling, you are getting screwed. At least around here, they are just salesmen, that’s it.

[Stinky]

On the life insurance, I agree with others about having an adequate amount of level term.

Has the “advisor” quoted you prices for the $1.5M level term and the $500K of VUL? Purely guessing here, but I suspect that the VUL will cost 2 to 3 times the cost of the term, for one-third the coverage. And, the “advisor” will make a commission of maybe 60-80% of your first year VUL premium. That’s the real motivation - commission to the advisor salesman.

I’m glad that you have a good tax person, as it sounds like you need him. I don’t think that you need an additional financial advisor that you pay based on AUM. At most, you might want someone who can do a periodic checkup on an hourly fee basis.

[Wiggums]

On the life insurance, I agree with others about having an adequate amount of level term.

Has the “advisor” quoted you prices for the $1.5M level term and the $500K of VUL? Purely guessing here, but I suspect that the VUL will cost 2 to 3 times the cost of the term, for one-third the coverage. And, the “advisor” will make a commission of maybe 60-80% of your first year VUL premium. That’s the real motivation - commission to the advisor salesman.

I’m glad that you have a good tax person, as it sounds like you need him. I don’t think that you need an additional financial advisor that you pay based on AUM. At most, you might want someone who can do a periodic checkup on an hourly fee basis.

+1

[Stinky]

Those of us in school systems have had to suffer for years with AXA. Their products are high-priced and I feel like no matter what they are selling, you are getting screwed. At least around here, they are just salesmen, that’s it.

Yes, I should have also mentioned that you should look beyond AXA for term insurance. You can almost certainly find cheaper coverage at Zander.com or term4sale.com.

[Jack FFR1846]

You have separate needs. But you do NOT, NOT, NOT need one "guy" to handle it all.

Your W2 and 1099 income is a bit "who cares?" to a qualified tax preparer. Add the rentals and if you really want someone overqualified to do your taxes, then hire a CPA. I know that most Bogleheads seem to read the IRS instructions and fill in the boxes with a pencil and think it's easy. I don't. I have 10's of peer reviewed publications, a couple patents and lots of products on the market with my stuff in them. I cannot do my own taxes.....and I have tried. I use a competent CPA and don't regret it at all. Well worth the money to me.

Your investments are already all set. You're in a 3 fund, right? Just leave the money in that and if you feel like rebalancing once a year, do it. If you don't feel like it for 5 years, then do it at 5 years. Or put it all in a target date fund and forget it forever.

The fact that he's with AXA doesn't make him a bad guy. The fact that he recommended a VUL makes him a bad guy. I don't care if you've fallen in love with the guy. He is a criminal. Never see him again.

[MittensMoney]

I had a friendly conversation with an advisor from Merrill Lynch last year, not regarding my finances but just a friend of a friend out for beers. He essentially bragged that on a per-hour basis, Financial Advisors get paid more than anyone else in that clients life including doctors, lawyers, etc.. Between the AUM fee and the large upfront commission (something like a VUL will pay 4-10% so if you put in $200k they just made $8-20k cash from it) they're making a killing off of people like you who value their advice. Your guy at AXA put in some work up front and gave you some valuable insight, I think if this advisor were to move to a more valid/modern business model (RIA or even better, hourly-fee) he'd be a great asset. Unfortunately he works for AXA which as a business model will never make financial sense -- if you truly want to simplify things and don't care how much it costs you now or in retirement, go ahead and hire the guy and buy his products. If you want to optimize your wealth accumulation, go a different direction.

[EHEngineer]

Background:

Fiance and I are getting married (each 29)

160k salary each.

Maxing out 401ks, IRAS, and Roth IRAS.

Currently, we've been following the 3 fund portfolio (VTSAX, VTIAX, bonds)

Situation:

We saw a financial advisor at AXA who spent about 6 hours with us over 3 meetings analyzing all of our accounts, giving advice on rental properties, work benefits, and asking questions about risk tolerance. I also told him about plans to do backdoor roth IRA conversions and mega backdoors. I really liked his approach of fully understanding our situation before recommending any products.

From statements we made, he inferred that we need about 2 million of life insurance (1 million to pay off mortgages, and 1 million for other stuff).

His proposal involves 20 year term insurance (1.5 million death benefit, to cover mortgages) and a VUL policy that we can contribute to instead of doing backdoor roth contributions.

We really like him and the advice he's given so far; I'm considering letting him manage all of our assets long term (just to centralize them and have someone that knows our big picture), as he's also good friends with our tax person and they can share info. The asset\tax situation can get tricky, since we have an LLC, S-Corp, two W2 jobs, and a 1099 job. We're also looking to buy more rental properties.

The complexity is mainly why I'm considering hiring an advisor.

My only concerns are those that I've read on Bogleheads regarding insurance salesman (can a VUL be good in my case?) and advisor fees (1% of assets managed per year).

Questions:

How do I decide if the advice he gives is worth the fee? What do I need to find out about the term insurance and VUL to make sure it's a good idea?

Note, I realize that most here do not want to mix "insurance and investments," however, I'm wondering if this can be a good idea in my specific case.

Any help appreciated, but let's stay away from the "it's a VUL so run" responses.

Let me know why

Cheers

Here's the reason to avoid this "advisor": He is getting paid both FEES and COMMISSIONS. No commission based advisor can ethically serve as a fiduciary. Why? Because if he were ethical fiduciary, he would not work for commissions. Nothing else matters. but I continue...

Further, All of your complexity is on the tax side, not on the investment side. You already have an accountant.

Third, you are not a candidate for a VUL. Here's why: https://www.whitecoatinvestor.com/varia ... t-account/

The Bottom Line

If you’re in the highest tax bracket(nope) both now and later (seems unlikely), you’ve bought a GOOD VUL (do you know what makes a good VUL?) packed with good investments (They can change on you), you’re committed to holding it your entire life (you're 29 and you just met this guy, wanna get married?), you will have no trouble making the premiums (disability is 3X as likely as death), this is money you plan to completely spend in retirement (a roth account can withdrawl contributions tax & penalty & interest free), you cannot invest in an extremely tax-efficient manner in a taxable account (you can buy VTSAX), and neither the government nor the insurance company changes the rules significantly over the next 6-7 decades (DECADES!) (or changes them to favor investing in a VUL over a taxable account) (know anyone still loving their VUL from 1955?), then this could work out very well for you. In fact, there’s about $4 Million in slush there to make up for some of your assumptions being a little off.(there may be a shipwreck with $4M of gold on the bottom of the ocean, but you're not the right person to go get it. Even if you try, you may find there is no gold.)

Fourth, have you noticed that in one visit, the salesman has changed your default position from "show me why a vul makes sense" to "I'm investing in this VUL unless you can convince me not to. That's the mark of a good salesman. You have been swayed.

Good luck.

Edited to fix highlighted comments

[Hoosens]

Those of us in school systems have had to suffer for years with AXA. Their products are high-priced and I feel like no matter what they are selling, you are getting screwed. At least around here, they are just salesmen, that’s it.

+1

I've seen many salesman come and go and AXA certainly has the most aggressive (at least in the 403b space), but that doesn't necessarily relate to this discussion. He may be a great guy, but at the very least shouldn't you at least take pause with the fact that he included that VUL policy in his proposal, which will earn him a very large commission? Did you happen to ask what his commission was if you purchased it through him? Do you think that was offered with your best interests in mind, or his?

[earlywynnfan]

OP, how about checking out the numbers this way:

Ask him how much he feels you need in insurance. Ask him how much you'd need to put in on a monthly/yearly basis. Have him show what this will do for you.

Price TERM life insurance for the same coverage. Invest the difference in a smart index fund of your choosing. THAT will be your "roth-like bucket" after the term runs out.

Compare to his numbers.

[MillennialFinance19]

Ugh, no.

CPAs do taxes and are quite qualified. If you need that, hire one and rely on his fiduciary-bound advice.

The salesman will surely buy you a steak dinner if you purchase a VUL. You can take that to the bank. Hope you enjoy the steak.

[NotWhoYouThink]

He sounds like an outstanding salesman who will do well in his chosen career and build up large portfolio of accounts to manage.

You don't need what he is selling, and could do better with term insurance and a 3 fund portfolio.

If he cared about you instead of his income, he would tell you that you don't need him, and he would certainly never give you the impression that a VUL is anywhere near as good as a Roth. But he cares about his income, and he thinks your portfolio will grow over time, and he wants the kick start from the VUL commission, with an annuity (to him) of 1% of your steadily growing portfolio.

Really, you are doing fine with 3 funds, and you probably do need term insurance. But after 20 years you don't need it any more, because your portfolio will have grown to the point where if either of you quit earning the other would be just peachy keen financially.

[petulant]

OP, what industry do you each work in and in what state?

[Brianmcg321]

VUL is absolute garbage. Don't buy.

[oinkyboinky]

OP, what industry do you each work in and in what state?

CA, tech and sales

[oinkyboinky]

VUL is absolute garbage. Don't buy.

Tell me more!

Each VUL is crafted a little differently, so is it possible this one is good for my specific situation?

[powermega]

DO NOT INVEST IN VUL!!!

Variable Universal Life Insurance, basically, is an investment vehicle where the death benefit amount is variable, based on the investment returns. But what happens is that, when you contribute $10k into the fund, for example, some $800 is taken out for "mortality charges" and other expenses. Worse, you cannot withdraw from this when you have a need. You can only "take a loan" against that VUL, and the loan would start accruing interest charges, and that interest starts eating away at your money.

Also, it's my understanding that if you do any "withdrawal" (meaning actual withdrawal and not a "loan") from the account, it's taken as "gains" withdrawal first before you ever reach the capital. And that money is considered ordinary income, unlike taxable account where the capital gains held long term are taxed at much preferable lower rates than your ordinary income tax bracket.

Not to mention the steep surrender charges you will face. A "withdrawal" from the account is actually a partial surrender.

============

The $2 million in life insurance policy does sound right. If you do want that level of coverage, then buy the darn $2m coverage and pay the premiums. Shop for lower rates, compare the rates the insurance agent quotes with what you would get for a level-premium term policy on https://www.term4sale.com/

But do not get sucked into investing with this AXA guy or his Variable Universal Life policy. At least you have been warned...

This post has a couple of errors:
1. You can take withdrawals from a VUL policy, not just loans.
2. If the VUL policy is a Modified Endowment Contract (MEC), then the withdrawals would come from gain first, then basis. I'm quite sure that the policy that being proposed is not a MEC, in which case the withdrawals would come from basis first, then gain.



As to the OP, I would say that if you need $2M in life insurance, that you get $2M in term insurance and don't bother with the VUL policy. The advice to contribute to a VUL policy instead of doing backdoor Roth conversions is especially poor advice. Just keep managing your 3-fund portfolio the way you always have. Just because the dollar amounts get bigger does not make the portfolio any more complex or harder to manage. If you feel that you need additional insurance, you should consider disability insurance.

[petulant]

OP, what industry do you each work in and in what state?

CA, tech and sales

Okay, thanks. So, first, a Roth IRA, including a backdoor Roth IRA, is 100% always better than a VUL. They both use aftertax money to invest in funds you pick, and you can rebalance between them with no consequences. You can also get the money out, generally tax free, from both, subject to inconveniences (Roth only take out contributions before 59 1/2; VUL should often be structured as a loan with spread and may have a fee). And, both account types have asset protection in most states (meaning you can't get sued for it).

However, the Roth IRA will always have lower fees because you pay no commission or sales charge. VULs in the 250-500K range will have sales charges of at least $10,000 or so baked into a 5-20 year period. On top of that, VULs have state premium tax (2.35% in CA) on all the money you put in. VULs have no income tax advantages over Roth accounts to overcome these fees and taxes, so they will always fall behind. Plus, you're hitched to paying for the life insurance portion, and you can't change easily if the company dumps your favorite index fund from the investment options.

Based on the issues above, a Roth account if available is always, and I mean strictly always, a better option than a VUL. The fact that the advisor suggested the VUL as an alternative means that you need to fire him because he is giving you bad advice for a commission, no ifs, ands, or buts.

After using all the Roth and TD space you have, the only time VUL beats a taxable brokerage account for investing extra income is if you make $400K plus (close but not yet), in a high-tax state (check), with no available Roth or TD space (no check), with extra points in a risky profession like medicine or having rental properties directly owned (unclear on property in LLCs with separate property manager or not), plan to lock the money up for 30+ years but still plan to use it during your lifetime (?), have no possible charitable bequest intent for the money (?), and are very educated about using it or have a very trustworthy advisor (no check). For now you would do better to max Roth avenues and then if you have more money buy stocks in taxable and shift to bonds in TD accounts.

[neurosphere]

Based on the issues above, a Roth account if available is always, and I mean strictly always, a better option than a VUL. The fact that the advisor suggested the VUL as an alternative means that you need to fire him because he is giving you bad advice for a commission, no ifs, ands, or buts.

Agree with this. From the information provided so far about the advisor and the advice, I can't quite tell if he is incompetent (e.g. does not understand how Roth's work and/or VUL) or unethical (does understand, but has put his his desire for financial success above that of the client). I guess there is not enough information to decide.

Either way, petulant has summarized nicely the very narrow set of parameters which MAY bring a VUL at least into consideration.

[lakpr]

This post has a couple of errors:
1. You can take withdrawals from a VUL policy, not just loans.
2. If the VUL policy is a Modified Endowment Contract (MEC), then the withdrawals would come from gain first, then basis. I'm quite sure that the policy that being proposed is not a MEC, in which case the withdrawals would come from basis first, then gain.

As to the OP, I would say that if you need $2M in life insurance, that you get $2M in term insurance and don't bother with the VUL policy. The advice to contribute to a VUL policy instead of doing backdoor Roth conversions is especially poor advice. Just keep managing your 3-fund portfolio the way you always have. Just because the dollar amounts get bigger does not make the portfolio any more complex or harder to manage. If you feel that you need additional insurance, you should consider disability insurance.

How does one find out whether a VUL policy is MEC? I ask this since my brother got sucked into the same AXA (then Equitable) VUL policy, and when he wanted to withdraw some money from the policy he was told that either he can get a "loan" that he does not have to repay (the remainder in the policy is enough to pay premiums for at least six more years), or treat the withdrawal as a partial surrender, pay surrender charges (almost getting to the time when these fees stop ... in 2021) and have the withdrawal treated fully as ordinary income.

On the bright(er) side, the guaranteed interest account in it apparently pays 3%

[powermega]

This post has a couple of errors:
1. You can take withdrawals from a VUL policy, not just loans.
2. If the VUL policy is a Modified Endowment Contract (MEC), then the withdrawals would come from gain first, then basis. I'm quite sure that the policy that being proposed is not a MEC, in which case the withdrawals would come from basis first, then gain.

As to the OP, I would say that if you need $2M in life insurance, that you get $2M in term insurance and don't bother with the VUL policy. The advice to contribute to a VUL policy instead of doing backdoor Roth conversions is especially poor advice. Just keep managing your 3-fund portfolio the way you always have. Just because the dollar amounts get bigger does not make the portfolio any more complex or harder to manage. If you feel that you need additional insurance, you should consider disability insurance.

How does one find out whether a VUL policy is MEC? I ask this since my brother got sucked into the same AXA (then Equitable) VUL policy, and when he wanted to withdraw some money from the policy he was told that either he can get a "loan" that he does not have to repay (the remainder in the policy is enough to pay premiums for at least six more years), or treat the withdrawal as a partial surrender, pay surrender charges (almost getting to the time when these fees stop ... in 2021) and have the withdrawal treated fully as ordinary income.

On the bright(er) side, the guaranteed interest account in it apparently pays 3%

AXA should easily be able to tell him whether his policy is a MEC or not. If he has the original illustration documents generated at the time of his policy creation, those documents should clearly state if the policy as illustrated would be a MEC or not.

It sounds like your brother was given contradictory information too. I forgot to mention, but loans from a MEC policy are also taxable like withdrawals to the extent they come from "gain". Also, distributions from a MEC before 59.5 years old also include a 10% penalty. For this reason, policy planners will try very hard to sell a policy that is not a MEC. You can read more about how MECs are treated here.

[TSWNY]

I saw AXA Advisor in the subject line and I just came in here to tell you to RUNNNNNNNNNNNN AWAY!!!!

[inbox788]

He has a 20 year term policy for the mortgages.
...
The rationale for the VUL was to have some life insurance after the 20 year term ends, and also to provide an additional "roth like" bucket.
...
Our asset\tax situation is getting complex, and will only get more complex as time goes on.
...
I was wondering if it would be worth the 1% fee to have someone that knows our entire financial situation and can help make changes and give advice along the way.

Do you have a quote for the 20 year term? What company? Is it competitive? https://www.term4sale.com/

VUL adds complexity and costs. Don't understand the problem you're trying to solve.

When your assets grow, 1% becomes very expensive, and not sure it helps your complexity. There's a good chance you're paying for bad advice and be worse off in more ways.

VUL is absolute garbage. Don't buy.

Tell me more!

Each VUL is crafted a little differently, so is it possible this one is good for my specific situation?

Not likely. How much will you have paid? What will you have? Roth is 1000x better than whatever promise of "roth like". Directly from their site...

Considerations
Please remember cash value life insurance does have many other considerations clients should review carefully before selecting a life insurance policy. Please keep these important points in mind:

If clients do not keep paying the premium on a life insurance policy, they will lose substantial money in early years.
To be effective, clients need to hold the policy until death. A life insurance policy generally takes years to build up a substantial cash value.
Tax-free distributions will reduce cash value and the face amount of the policy. Clients may need to pay higher premiums in later years to keep the policy from lapsing.
Clients must qualify medically and financially for life insurance, unlike a Roth IRA.
Generally, there are many additional charges associated with a life insurance policy, including but not limited to a front-end load, monthly administrative charge, monthly segment charge, cost of insurance charge, additional benefit rider costs, and surrender charges.

https://equitable.com/selling-life-insu ... lternative

FWIW, in your situation, I would consider forgoing life insurance for the time being. Insuring mortgage isn't always necessary (do you have disability insurance? higher priority IMO), and I didn't see any of the other stuff listed that needed insurance. You may not want to give a spouse more incentive. Sorry he wasted 6 hours of YOUR time, unless he's going to help mange all your properties, too.

[goingup]

Background:
The complexity is mainly why I'm considering hiring an advisor.

You've got a tax person, which is smart, IMO.

Getting term insurance is a good idea. It's a commodity and can be gotten easily. Don't get anything other than term.

Don't hire an AXA financial advisor. You'll regret it. Since you've been on this forum for 5 years you must know that a simple portfolio of broad index funds is a fantastic way to invest. The trouble with an AXA advisor is 1) the expensive funds you'll be put in 2) the AUM fee you'll pay year after year 3) the way you'll be stuck in a complex portfolio which is hard to unwind, especially in a taxable portfolio.

[Grt2bOutdoors]

His advice is not worth the fee. Ask yourselves this, are you so enamored with him that you would fork over up to 30% of what could have been your networth in 20 or 30 years? Fees are cumulative, not a one time event. Toss in the loss of compounding interest and growth and that's where the numbers become very lucrative - for the agent!! For you, well, you will have to live on 70% instead of 99% or 100%. Still like your guy?

Don't you just love the way the adviser tells you, you need $1 million for the mortgage? Um, no, what you need is to get a policy to protect your dependents - your wife and future offspring when you have them. You think for a moment, that a house is the overriding concern of those you leave behind? Sure, they may want to stay there but what if they don't? Then sell it - poof! no more mortgage and you didn't need life insurance to take care of it. As you make payments, the balance is going to become less and less, in 20 years it's likely you'll have the entire mortgage paid off - why pay 20% for that? The suggestion was already made, go to zander.com or term4sale and price a pure term $2 million life insurance policy, for each of you - that's $4 million. I'll bet the policy premiums are cheaper than your AXA sold term + VUL. IMO, a VUL is an acronym for Virtually Unlimited Losses for you. Roth-like, what a stretch of one's imagination - tell the adviser you want it in writing showing the IRS recognizes a VUL as a Roth, that the AXA organization guarantees the VUL provides Roth benefits per the IRS regulations and it was signed by the CEO of AXA. It will never ever happen, ever. You sign up for this VUL and the adviser will be using his commission to make a downpayment on his new sports car or perhaps pay for his kids college tuition next year.

You've been on this forum for 5 years, go look up the posts by forum poster Mephistophles (may he rest in peace!) on why these financial products are never a good idea. If you have to read more than a paragraph to understand all the intracies and fees associated with any product, then pass! They are complicated for a reason. And no, it's not for your protection, it's for theirs.

[Nate79]

Run from this insurance salesman.

[cdu7]

Background:

Fiance and I are getting married (each 29)

160k salary each.

Maxing out 401ks, IRAS, and Roth IRAS.

Currently, we've been following the 3 fund portfolio (VTSAX, VTIAX, bonds)

Situation:

We saw a financial advisor at AXA who spent about 6 hours with us over 3 meetings analyzing all of our accounts, giving advice on rental properties, work benefits, and asking questions about risk tolerance. I also told him about plans to do backdoor roth IRA conversions and mega backdoors. I really liked his approach of fully understanding our situation before recommending any products.

From statements we made, he inferred that we need about 2 million of life insurance (1 million to pay off mortgages, and 1 million for other stuff).

His proposal involves 20 year term insurance (1.5 million death benefit, to cover mortgages) and a VUL policy that we can contribute to instead of doing backdoor roth contributions.

We really like him and the advice he's given so far; I'm considering letting him manage all of our assets long term (just to centralize them and have someone that knows our big picture), as he's also good friends with our tax person and they can share info. The asset\tax situation can get tricky, since we have an LLC, S-Corp, two W2 jobs, and a 1099 job. We're also looking to buy more rental properties.

The complexity is mainly why I'm considering hiring an advisor.

My only concerns are those that I've read on Bogleheads regarding insurance salesman (can a VUL be good in my case?) and advisor fees (1% of assets managed per year).

Questions:

How do I decide if the advice he gives is worth the fee? What do I need to find out about the term insurance and VUL to make sure it's a good idea?

Note, I realize that most here do not want to mix "insurance and investments," however, I'm wondering if this can be a good idea in my specific case.

Any help appreciated, but let's stay away from the "it's a VUL so run" responses.

Let me know why

Cheers

I’m going to be as clear as possible: Axa is one of the highest cost and worst performing criminally high fee organizations out there. If you go with this advisor you will be causing unrepairable harm to your financial future which will haunt your nightmares for years to come. RUN away now! Run! Do not continue contact with this lying predatory salesman.

[Soon2BXProgrammer]

If you really want an advisor, then two organizations come to mind:

https://garrettplanningnetwork.com/
https://www.xyplanningnetwork.com/

Note you still need to do your due diligence. Not every advisor in these organizations would be a good fit for you.

Disclaimer: I'm a XYPN member

[Phineas J. Whoopee]

I agree with the advice not to go with any AXA insurance salesperson's recommendation.

Years ago they got access to the phone directory of the company I worked for. I know that because all around my area individuals got called, then the next one, then the next one. Then me.

I said words to the effect of no thank you, I don't want to buy any of your products or services. Please put me on your do not call list (those are the words to use per the federal law).

Several days later somebody who identified himself as the manager called, and told me "we don't sell products or services."

It is to laugh.

PJW

[Stinky]

Several days later somebody who identified himself as the manager called, and told me "we don't sell products or services."

It is to laugh.

PJW

Then what is it, exactly, that AXA does?

(I understand - rhetorical question)

[inbox788]

VUL is absolute garbage. Don't buy.

Tell me more!

Each VUL is crafted a little differently, so is it possible this one is good for my specific situation?

I bookmarked this WhiteCoatInvestor article "Variable Universal Life Insurance as a Retirement Account" and finally got around to reading it. It's long, but very detailed, and makes a good case FOR the VUL, but only for the very specific individual who may be able to benefit from it.

https://www.whitecoatinvestor.com/varia ... t-account/

Is the VUL you're offered really "a good one"? AND more IMPORTANTLY, is your specific situation the right one? For 99.9% of us, it's NOT! If you read it carefully, I'm sure you'll find several if not many disqualifying criteria. And even if you pass every single one, the benefits are minimal to modest, while the pitfalls are many.

My takeaway is "The whole comparison here boils down to insurance costs versus tax costs." There's much more opportunity to mitigate tax costs than the high insurance costs. And if you're like the 99% of people who don't keep the policy till the end, you likely pay both costs.