What is your main reason for having life insurance? If I were you, my main reason is to protect my family's income in case I die. If you are looking to build savings for retirement, then life insurance is not the way to go. If you want to do both, buy term and invest in a savings vehicle that meets your investment objective.
A variable universal life policy is where part of premium payments is invested in the stock market and is put into an account called the cash value. So there is nothing guaranteed that your cash value will grow. It may even lose money.
In a guaranteed universal life policy, none of premiums is invested. Instead the insurance company will give you a guaranteed interest rate on the cash value. That is the only difference between them two.
To me, both of these policies are not good because of the cash value feature. You lose all the cash value when you die, so basically you were paying too much premiums to start with. If you ever wanted to use the cash value, you can only borrow the surrender value, which will decrease the death benefit.
I suggest you buy a 20 year term insurance. It will save you lots of money and you can get lot more coverage if you want. At the same time, you and your husband should open a Roth IRA. You can't have joint accounts in a Roth IRA, they are for one person only. If you invest $100/month for next 20 years at a 10% rate of return, you can have $76,570. If your husband does the same, he too can have $76,570. When you are in your 60s, do you really still need life insurance? If you still do, then you should ask yourself, "do I still need as much coverage?"
With your current universal life policy, I suggest you surrender it. I don't know how much you and your husband have in the cash value. You can only contribute up to $4000 for tax year 2006 and 2007 into your Roth IRA. If the cash surrender value is more than that, then put in $4000 now for tax year 2006 before April 17. And put the rest (up to $4000) in for tax year 2007. For 2008 and beyond, you want to invest using the dollar cost averaging concept. This is where you invest the same amount every month, no matter how the stock market performs. By doing this, you will lower the cost per share.
to learn more about life insurance ane IRAs, see my research: http://finance1o1.blogspot.com
· 1 decade ago