8 Misleading Life Insurance Myths
Myth # 7: Variable Universal Life Policies Are Always Superior to Straight Universal Life Policies over the Long Run
A Variable universal policy (VUL) combines life insurance protection with investment opportunities. Here besides getting a death benefit, the policy holders are provided with cash value account. Anything paid in excess of premium above the current costs of insurance are deposited in to the cash value account. The account is credited each month with interest.
Remember, there are several layers of fees relating to both the insurance and cash value accounts which are charged against the policy holder. Even when the variable subaccounts within the policy do not perform well, if offer a lower cash value than offered to someone with a straight universal life policy.
Myth # 8: I'm better off Investing My Money than Buying Life Insurance of Any Kind
In this way you may fall into greater risk. As you know, returns from investment are volatile, but in case of life insurance policy, the policy owners are provided with guaranteed returns. Depending solely on your investments especially in the early years of your life is not advisable. The one, who has a dependent, must never do so. You only think, if you die without coverage for them, how long will your current assets last and how will they survive after that. You shouldn't forgo life insurance unless you have assets worth million to cover expenses after you're gone.
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