Swapping out VUL for Term

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WhyAmeriprise
Posts: 41
Joined: Fri Jan 05, 2018 2:52 pm

Swapping out VUL for Term

Post by WhyAmeriprise » Sun Jan 21, 2018 10:57 pm

I've crunched the numbers and it makes no sense to keep the VUL that I've had for many years. 16 years since they recommended I bump it up to $250k. The VUL has some cash value, but I am separating from my FA. I've gotten a few quotes for 20-year level term for $250k and it's the same amount that the VUL considers the "Cost of Insurance", but I'll be able to invest the rest without the 5% fee on the premiums paid, plus the various administrative fees in the VUL, and I'll be able to choose my own real funds, instead of the look-alikes that the VUL offers, but with much lower returns.

The question I have is what folks would do for the next couple of months while I'm waiting to get fully through underwriting of the new policy. It seems like continuing to allow the VUL to invest into subaccounts is a waste of 5-7% right off the top, and that I should just break it to the FA, and let the funds sit in the "fixed" account until the whole policy is ended. Or, should I purposely sell off some subaccounts to build up the "fixed" account, and stop paying the monthly premium for the next month or two?

Ultimately everything in the VUL will be sold off, because they're proprietary subaccounts that sound like morningstar funds, but aren't.

mhalley
Posts: 5685
Joined: Tue Nov 20, 2007 6:02 am

Re: Swapping out VUL for Term

Post by mhalley » Mon Jan 22, 2018 12:57 am

I would not cancel it until you have the new policy in place.

WhyAmeriprise
Posts: 41
Joined: Fri Jan 05, 2018 2:52 pm

Re: Swapping out VUL for Term

Post by WhyAmeriprise » Mon Jan 22, 2018 11:35 am

mhalley wrote:
Mon Jan 22, 2018 12:57 am
I would not cancel it until you have the new policy in place.
Of course! I'm not going to cancel until the new policy is completely through underwriting.

The question is if I can/should do anything regarding the premiums, whether to continue paying monthly as-is, draw down some of the investments in the account already. If I continue to pay premiums for a month or two, does it make sense to ask them to just put the excess premium into the "fixed" account, to avoid the loads and fees for the subaccounts?

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