I've written twice before about Variable Universal Life (VUL) insurance policies and how they can be used as another retirement account. The first time, I was extremely negative about this type of life insurance policy. The second time, cautiously optimistic that there could be a good variable universal life policy available. This time, I'm neutral. While this could work for the right person with the right financial situation and the right policy, I won't be buying one any time soon.
First, by way of disclosure, the main firm using these for physicians right now is Larson Financial, the largest physician-specific financial advisory firm in the country, who I've written about before. Larson has hired me in the past for some consulting work and we've worked on some joint projects over the years. I have occasionally referred readers to them for hourly financial planning. They've also purchased advertising on this site. Obviously, my financial incentive/conflict of interest in this regard is to treat them with kid gloves. I've had readers who love Larson and readers who hate them. I don't know that they're any more polarizing than other firms, they just have more physician clients than the others so I hear more about them, for better or worse. The only beefs I've really ever had with them are their AUM fees are relatively high (although not higher than industry average/standard levels and no higher than some other advertisers I have listed) and, in the past, have used Variable Universal Life Policies more than I think they probably should have.
Other than those two issues, I think they're fine to use, but there is no perfect financial advisor. Larson Financial has certainly taken a lot of flak (including from me) in the past for using VULs, and over the last 2-3 years has made some excellent changes in how they sell VULs, such that those who buy them should be much happier with their purchase than some purchasers have been in the past. As a result, they also sell a lot fewer VULs. They tell me that, from a financial perspective, they don't really care one way or the other, since in the long run they make more off of AUM fees than off VUL commissions on the same amount of money. But they feel they have certain clients where this option is a no-brainer so they feel compelled to continue to offer it to those clients out of a fiduciary duty, despite the poor reputation of VULs. At any rate, it is impossible to separate a discussion of VULs as physician retirement accounts from a discussion of Larson financial.
Tom Martin, CFP®, CPWA®, AIF®, a partner at Larson Financial who has guest posted here previously, promised readers years ago a more complete discussion of VUL policies. Unfortunately, due to compliance issues, it borders on impossible for a licensed advisor to comment on a post like this, much less write it. The little rules are kind of stupid sometimes, such as the fact that you can't call an insurance policy an investment, even though we all know that's why it is being bought. So I'll be doing the writing today and all opinions here are mine, in case that isn't obvious once you read them (which I think it will be.)
Biased Against Cash Value Life Insurance
As a general rule, I don't like cash value life insurance for three reasons.
First, it is complex. There are a lot of moving parts and assumptions and monstrously long prospectuses and disclosures. As a general rule, complexity favors the issuer and the salesman of a financial product, not the buyer. VULs are among the most complex of insurance products. I have spent a ridiculous amount of time wrapping my head around how these policies in general and this policy in particular is likely to perform. Even this post about it is 3-5 times longer than my typical post.
Second, I'm not a big fan of mixing insurance and investing. As a general rule, you end up with inferior insurance and investments. What are the odds that the company has combined the best possible insurance with the best possible investments? Not good.
Third, cash value life insurance is generally sold with ridiculously large commissions. A commission, once paid, never comes back to you. To make matters worse, someone paid by commissions has a serious conflict of interest to recommend the product which pays the highest commission (and as much of it as you will buy), which often is the worst product for you. As a general rule, avoiding paying commissions on financial products whenever possible is a good idea.
The Premise Behind Variable Universal Life Insurance
One of the reasons I dislike whole life insurance is that you're tying your money up for decades at a relatively low rate of return. Now, there are a few reasons to buy it, (ask yourself these 12 questions before doing so) most of which revolve around wanting a life-long death benefit. If I'm going to tie my money up for 50-80 years, I want a decent rate of return for doing so. With whole life, your cash value is invested with the rest of the insurance company's investments, which are mostly bonds, thus the low rates of return. With VUL, your cash value is invested in the equivalent of stock mutual funds, and thus theoretically, should have higher returns in the long run. Assuming you can get the same mutual funds inside a VUL that you would use outside a VUL, the question comes down to whether the additional insurance costs can be made smaller than the tax costs over the long run for you personally.
Two Very Large Caveats about Variable Universal Life Insurance
Before we get any further, it is important to bear two things in mind. First, this discussion is comparing a Variable Universal Life Insurance to a taxable account. If you have not maxed out all your other available retirement accounts (401(k), profit-sharing, individual 401(k), Defined Benefit/Cash Value Plan, Backdoor Roth IRAs, 403(b), 457, HSA etc) AND want to invest MORE for retirement, then you don't need to read any further. The VUL is NOT going to beat these types of accounts given their special tax treatment. In fact, I would argue you should also have a significant non-qualified/taxable account as a cushion before considering VUL, especially if you give any significant sums to charity.
The second caveat is that the VUL had better have the best possible investing choices for you. If it isn't full of low-cost passive funds such as those from Vanguard, DFA, iShares etc, then I wouldn't bother looking at it. Even if a VUL structure works for you, over 6 decades it isn't going to be able to overcome poor investment options. Larson has gotten insurance companies to put DFA funds into the VULs they sell, which are the same funds they put their clients' qualified and non-qualified money into.
Variable Universal Life Insurance Illustration
Larson has been working with FINRA to make a calculator/spreadsheet demonstrating the benefits of VUL. It took a long, long time to be approved but finally was earlier this winter. I don't have access to the calculator (so I can't give it to you) but they've sent me its output using some reasonable assumptions and that's what I've illustrated here showing how a VUL could be beneficial to the right person.
In this illustration, we're using the “Nationwide YourLife® Accumulation VUL” a loaded VUL Larson uses frequently with its clients. They also occasionally use a non-loaded TIAA-CREF product if a client wants to break even sooner, but feel this one has better characteristics in the long-run. There are two things worth noting in the prospectus. The first is that there are tons of investing options in the subaccounts, including low-cost index funds and DFA passive funds. The second is a rider that is very important towards the end of the distribution phase due to a problem universal life insurance policies have due to the variability of their returns- the Overloan Lapse Protection Rider. This is what keeps the policy from imploding if you borrow too much and market performance sucks. Here is the wording from the prospectus:
A policy owner is able to prevent the policy from Lapsing due to Indebtedness by invoking the Overloan Lapse Protection Rider, which provides a guaranteed paid-up insurance benefit. The Rider is designed to enable the policy owner of a policy with a substantially depleted Cash Value, due to Indebtedness, to potentially avoid the negative tax consequences associated with Lapsing the policy.
The policy owner is eligible to invoke the Rider upon meeting the following conditions:
• Indebtedness reaches a certain percentage of the policy's Cash Value (the percentage will range from 84% to 99% based upon the life insurance qualification test and the Insured's Attained Age); • The Insured is Attained Age 75 or older; • The policy is currently In Force and has been In Force for at least 15 years; • The policy's Cash Value is at least $100,000; and • All amounts available for partial surrender not subject to federal income tax have been taken. The first time the policy's Indebtedness reaches the percentage that makes the policy eligible for the Rider, Nationwide will notify the policy owner of the policy's eligibility to invoke the Rider. The letter will also describe the Rider, its cost, and its guaranteed benefits. The Rider may be invoked at any time, provided that the above conditions are met.
The Overloan Lapse Protection Rider Charge is a one-time charge deducted at the time the Rider is invoked, and is assessed against the Cash Value allocated to the Sub-Accounts and the fixed investment options. The charge is intended to cover the administrative costs and to compensate Nationwide for the risks associated with the Rider's guaranteed paid-up death benefit. The charge is the product of the policy's Cash Value and an age-based factor ranging from 0.15% to 15.70% as shown in the Policy Data Pages. If the Cash Value less Indebtedness is insufficient to satisfy the charge, the Rider cannot be invoked without repaying enough Indebtedness to cover the charge.
There is a lot of legalese there, but it is a key part of the concept so I thought it was important to include. Basically if you've borrowed a ton of money against the policy, and then the market tanks, rather than having the policy implode on you (making all gains distributed to you fully taxable) you can pay a charge (hopefully just from the remaining cash value) and walk away from the thing, although there is potential that you would have to bring money to the table to do so.
Our Assumptions
We assume a 7.5% nominal return on the investments, whether inside a taxable account or a VUL, and a 2% dividend yield. So the entire investment is essentially in stocks. We assume they are both funded with $72,000 per year from age 36 until age 65 (30 years). This buys a $4 Million death benefit. So in an effort to make things comparable, $2,555 per year is taken from the taxable side and used to purchase term life insurance for the first 20 years. I asked them to illustrate it without that expense, but FINRA wouldn't let them. If you did, it would definitely push the break-even point out a bit. Just for fun, I ran 20 years of $2,555 a year contributions at 7.5% per year for a total of 60 years, the same length of time as this illustration. It grows to $2 Million-not insignificant, like any small expense compounded for 6 decades.
Then starting at age 66 and for the next 30 years (or as long as the money lasts) you pull $520,596 out of the account (7-8%) each year, theoretically spending all of it before you die. Your capital gains/dividend rate is 20% + 3.8% PPACA tax, so you're in the top bracket. It also assumes a 6% state tax rate. It also assumes you are not paying any kind of asset management fee in the taxable account (FINRA wouldn't let them use that assumption in the calculator either, although in that case, it would make the VUL look dramatically better because it is far better to pay a single commission, even a large one, than 60 years of 1% AUM fees.) So, with these assumptions, how does the VUL stack up?
Copyright 2015, Larson Financial Group LLC. Patent pending. Used with permission. All rights reserved.
This is fairly complex, so let me go over it slowly. Let's start on the left. The yellow line is the taxable account value. The red line is the taxable account value after the assumed tax rates have been applied to it. The green shaded area is the cash value of the VUL. As you can see, the after-tax taxable account breaks even with the VUL cash value after 24 years. The pre-tax taxable account is still well ahead of the VUL cash value at retirement (66). You end up with ~10% more in taxable than you do in the VUL after 30 years. Of course, the government wants a chunk of that, and if you sold the entire thing at age 66, you would get less cash out of the taxable account than you would out of the VUL, but not much less.
In the distribution phase it gets more interesting. The breakeven point for the pre-tax account is at about age 70, and then the taxable account runs out of money 8 years before the VUL. The difference between how much can be pulled out and spent from the VUL versus the taxable account is about $4 Million ($11.3M versus $15.6M, all nominal of course.)
The chart on the right illustrates the death benefit. If everything works out well and you live to be 96, there is no death benefit. If you die early on when you may have an insurance need, you get plenty of money from either the VUL or the term policy, although likely more from the VUL. When you die, of course, you get the death benefit, not the cash value. If you die in between when the term policy ends and retirement (or even a little after) your decision to invest in cash value life insurance is going to turn out pretty well.
Copyright 2015, Larson Financial Group LLC. Patent pending. Used with permission. All rights reserved.
This is the other output from the calculator/spreadsheet. It mostly demonstrates costs. By showing a time period of 60 years, it makes the massive commission cost look really tiny. Essentially, in the beginning the insurance costs (especially the commission during those first ten years) are dramatically higher than the tax costs in the taxable account. Then, as the accounts grow the tax drag gets larger until it eventually eclipses the cost of the insurance (which goes down a bit once the commission is fully paid). That breaks even about 13 years into the policy. Then, when you start selling and withdrawing at age 66, the tax costs go up dramatically. One interesting aspect of this chart is the way the insurance costs rise from age 76 to 91, then fall precipitously. They rise because the insurance component on the elderly is really expensive- that cost is NOT fixed throughout the life of the policy, it rises and at an increasing rate. The insurance costs fall after age 91 because you are decreasing the face value of the policy as the cash value falls due to withdrawals.
Below the chart, it lists the assumed costs. As you can see, the costs on the taxable account are almost all taxes. The costs on the VUL are almost all insurance costs. The surrender charge list is a reminder that this sort of a thing is a terrible idea if you aren't going to keep it your entire life.
Why Might Variable Universal Life Insurance Work For You?
So, what is it that makes the insurance policy work so well in this illustration. There are a few factors at work.
First, the VUL includes a death benefit. That gives it a $2,555 advantage (the cost of the same amount of term insurance) each year for the first twenty years, the time at which even a small difference has a long time to compound.
Second, the VUL is not taxed as it grows. A 2% yield taxed at nearly 30% basically knocks 0.6% a year off the return of the taxable account. So the taxable account isn't growing as quickly as it would in a tax-protected account.
Third, when you withdraw money from a VUL, the first thing that comes out is the premiums you've paid. That comes out tax-free AND interest-free. That lowers the death benefit, of course, but you're not buying this thing for the death benefit. Basically, your first 4+ years of withdrawals are a return of your premiums paid, so you don't have to borrow that money. After that, you have to start paying interest on the money taken out of the VUL, since you're borrowing it (technically from the insurance company with the cash value as collateral), not withdrawing it. But that 4+ years gives the VUL a big boost in the distribution phase. Meanwhile, the assumption in the illustration is that you're withdrawing evenly from the taxable account, paying 29.8% on all gains. It was simply too complex to model an extremely tax-efficient strategy in the taxable account, but we'll discuss that a little later.
The Bottom Line with Variable Universal Life Insurance
If you're in the highest tax bracket both now and later, you've bought a GOOD VUL packed with good investments, you're committed to holding it your entire life, you will have no trouble making the premiums, this is money you plan to completely spend in retirement, you cannot invest in an extremely tax-efficient manner in a taxable account, and neither the government nor the insurance company changes the rules significantly over the next 6-7 decades (or changes them to favor investing in a VUL over a taxable account), 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.
Christian Feinauer running it out on the East Buttress of El Capitan- try getting life insurance when you do this on weekends
But I'm Not Buying a Variable Universal Life Policy
However, I'm still not going to buy a VUL for myself any time soon, despite having an income higher than most doctors for a number of reasons.
Too Many Bad Habits
Buying life insurance is a pain for me, so I try to do it as little as possible. While some schmuck actuary in Connecticut is trying to understand the difference between 5.10 and 5.11 and how much more dangerous climbing is if you do it more than 500 miles from home, I'm sweating bullets wondering how much more I'm going to pay for this policy than the idiot down the street who sits around watching TV all evening after work but hasn't yet been diagnosed with the diabetes he'll have soon. Combining insurance and investments usually isn't a good idea, but it's an especially bad idea if you can't get insurance or can only get it at a higher rate than other people.
Tons of Tax-Advantaged Accounts
I barely have a taxable account, and it is threatening to disappear all the time. In fact, it did from 2010 to 2015 before being resurrected. Where does my taxable account go? Four places- It goes into tax-protected accounts as more of them become available, it goes to charity in lieu of cash, it pays off debt, and it pays for Roth conversions at appropriate periods in my life. Many WCI readers are appropriately jealous of my available tax-protected space. This includes a partnership 401(k)/profit sharing plan, a defined benefit/cash balance plan, an individual 401(k) for WCI for me, an individual 401(k) for WCI for my wife, Backdoor Roth IRAs, an HSA, Roth IRAs for each of the kids, UGMAs for each of the kids, 529s for each of the kids. Not counting the kids money, I've got over $200K a year in tax-protected savings available to us if there is sufficient income to max it all out. At a 20% savings rate, that requires a million bucks a year in income just to max it out. At a million bucks of income, I would probably be giving close to $100K to charity each year. So, in order to want to start investing in a VUL, I would need to be saving something like $400K a year of a ~$650K net income. It just doesn't make sense for me. Not only would you need a huge income for this to work, but you also need to be plagued with career-long terrible retirement account options and a lack of desire to make large charitable donations.
Tom Martin argues that since some docs have a terribly low amount of tax-protected investment space (and I've met a few of you) that this can make sense at quite low income levels for the right doc. If you think that might be you, you'll have to run the numbers. Not my circus. Not my monkeys.
Not Interested In Long Commitments
I've already got three long commitments in my life, my marriage, my partnership, and my side business. I don't need any more. Buying a VUL is like getting married- til death do you part. If you decide you don't like this VUL at any point in the next 6 decades, you may be faced with an unsavory choice. I mean, you don't even break even (compared to investing in a taxable account) for two and a half decades. My financial life has changed a ton in the last 10 years. I have no idea how much it might change in the next 10, much less 50. Even the commitment to come up with $72K a year for the next 30 years is unpalatable to me. Minus our mortgage, savings, taxes, charity, and major expenditures, that's almost what my family lives on. I would hate to be in the situation where I felt like I was working longer than I wanted to in order to feed a ridiculous commitment to a life insurance policy. Sure, with universal life there are lots of ways you can decrease the premium due, but that obviously has consequences to the policy. The more of that you do, the more of the benefit for which you bought the policy in the first place goes away. In this particular case the minimum premium can be dropped as low as $17,592.
There is just a lot more flexibility with a taxable account. If I don't want to fund it this year, I don't have to. If I want to put in less, I can do that. If I want to put in more, I can do that. If an attractive investment comes up that no one had thought of when the policy was designed, or one that can't be put into a policy, I can invest in that. Think of all the financial innovations in the last 70 years. Now, imagine you were invested in a VUL that was packed with investments from 1950. No index funds. No ETFs. No DFA. No Vanguard. Now, consider all the investments that don't get put into VULs- P2P Loans, small business ventures, private equity, hedge funds, real estate etc. Flexibility has value.
A VUL can, however, be funded in much less time than 30 years. So I asked them to use the same assumptions, but only make payments for 10 years (same $72K a year payments and keep everything else the same.) This is how it looks:
Copyright 2015, Larson Financial Group LLC. Patent pending. Used with permission. All rights reserved.
As you can see, the concept can still work even without the 30 year commitment. Still a 10 year commitment, but that's more palatable.
I Can Invest Very Tax-Efficiently
When I look at that first chart, all I can think about are all the ways in which I could cut down on the tax burden. For example, you can select funds with a dividend yield of less than 2%. You can do tax-loss harvesting. You can move to a state without a state income tax. You can use your taxable account to pay for Roth conversions of tax-deferred money. You can use appreciated shares for gifts to charity. You can sell the highest tax basis shares first. You can spend from your retirement accounts instead and leave the highly appreciated shares to your heirs, who will be able to take advantage of the step-up in basis at death.
Plus, this is all illustrated at the maximum tax rates, including during retirement. How much taxable income can you have in retirement before you hit the maximum tax brackets? Well, in 2016 for a married couple filing jointly it's a taxable income of $467K. That's after all your deductions and it doesn't include any Roth IRA withdrawals. Even the 3.8% Obamacare tax doesn't kick in until you hit an adjusted gross income of $250K. We're basically living on $100K now and having a heck of a great time, essentially denying ourselves nothing that will make us any happier. Perhaps $200K if you throw in a new boat or car every year or two and some expensive vacations. What the heck am I going to do with the equivalent of a half million dollars in today's dollars in retirement? I'll be giving it away is what I'll be doing (and there are tons of tax-advantaged ways to do that), or else I've got to come up with a lot more expensive hobbies than what I'm doing now. Even if you can just get out of the top bracket into the second highest bracket, your capital gains/dividend rate drops to 15%. In fact, if you can get your taxable income down below $75K a year (very reasonable for many docs enjoying a comfortable retirement-remember that's after deductions and doesn't include Roth withdrawals) you don't pay capital gains taxes at all under current law.
Now, I've got to give Larson credit. I've seen lots of insurance agents produce terrible illustrations showing how awesome whole life is by assuming every dollar your taxable investments ever make are taxed at 50% every year. At least Larson is using appropriate assumptions. But those assumptions don't apply to me nor to the vast majority of physicians. If you think they apply to you, run some calculations on just how much retirement income you think you'll have. Bear in mind the minimum distribution at age 70 on even a $10 Million tax-deferred account is less than $400K.
So I asked Larson to go back to the drawing board and see how things look with a lower overall tax rate on the taxable account. They sent me tons of illustrations, but I'm only going to show you two.
This one keeps everything else the same as the initial example, except we lower the Federal income tax level from 20% to 15% on dividends and LTCGs, keep the 3.8% Medicare tax, and eliminate the 6% state tax. In essence, we've lowered the marginal tax rate from 29.8% to 18.8%.
Copyright 2015, Larson Financial Group LLC. Patent pending. Used with permission. All rights reserved.
As you can see, lowering the tax rate by 11% turns that $4 million of slush into a break-even scenario. The whole comparison here boils down to insurance costs versus tax costs. If you can get the tax costs lower, a taxable account can beat VUL. Just to illustrate that further, this example lowers the marginal tax by another 5% to 13.8% (yes, I know that 10% federal plus 3.8% medicare doesn't make any sense.)
Copyright 2015, Larson Financial Group LLC. Patent pending. Used with permission. All rights reserved.
In this case, you see that the taxable account dramatically outperforms the VUL the entire time, hitting age 95 with $3M more. Whether or not you can get your effective tax rate on your investments down to 13.8%, I'll leave to you to consider.
Risks of Change
Change happens, and it happens a lot over 6 or 7 decades. With that much time, risk of change is substantial. Government can change the rules about insurance and investing. Those changes could make your decision about VUL better or worse, but either way, it is out of your control. The insurance company can make changes too. Perhaps right now it has nice little DFA funds available in the VUL, but there is no reason they can't substitute them for some terrible loaded high ER actively managed fund next year. Perhaps they raise the cost of insurance, or the interest rate on borrowed money. There is also the risk of investment underperformance. If my taxable investments do worse than expected, I get less money and pay less in taxes. If my VUL investments do worse than expected, it's possible I may have to reduce my death benefit and/or contribute additional money to the policy (or invoke the rider.) The opposite is also true, of course, but there is risk there and I dislike risk outside of my control.
Are there people for whom a good VUL will work out better than a taxable account? Absolutely. But I'm probably going to continue to disagree with the Larson partners about the percentage of physicians for whom it is a good move. If you think it might be right for you, feel free to buy it. Perhaps you're a plastic surgeon making $1.5 Million a year with an $8 Million net worth, serious asset protection concerns (and living in a state where cash value life insurance gets good asset protection,) and only $100K a year of tax-advantaged space–I could be easily convinced this is a good move for you. But if you're a family practitioner making $180K, not maxing out your 401(k), still owe $200K in student loans, and don't have a taxable account, this might be one of the stupidest financial moves you could make. If you're like most docs, and somewhere in between those two extremes AND looking at having a major portion of your retirement savings in a taxable account, you might want to run the numbers and Larson's tool will help you to do that. Just remember that every calculator is “Garbage in, garbage out” so make sure your assumptions are as good as you can possibly make them.
What do you think? Do you own a VUL? Why or why not? If so, are you happy with it so far? How do you plan to spend from it? What were the main factors that made you decide to buy it? Would you consider buying one of these if your income went up or your tax-protected space went down dramatically? Why or why not?
Great post. I can’t imagine buying into one of these unless I had a 7 figure income. The loss of flexibility is the biggest drawback for me – can’t imagine committing more than the median family income for a few decades. I’ll stick with taxable.
You can buy a smaller policy, but the issue comes in that if you really can’t afford a larger policy, are you really in that high of a tax bracket? But obviously a doc in California or Manhattan without much in the way of retirement accounts could make this work at a lot lower income than it would make sense for me to do it.
Part of your comments about VUL and financial advisors remind me of when Bogle talks about bond funds and active bond fund managers. In order to compensate for the increased cost associated with an actively managed bond fund, active fund managers take on a higher level of risk compared to their indexed peers to have equivalent expected returns.
Second, that 4 million dollars that you call a slush fund, I call contingency in my line of work. All contingency means to me is unaccounted cost, liability, or profit. Just because you cannot identify the liability or cost, doesn’t mean that it all will be profit (or any of it for that matter). We landed a job at work that we thought would be a massive money maker. Millions in contingency! Turns out the contingency is gone and so are the profits. Turns out the complexity of the job made our assumptions while estimating it not account for the real world. I feel the same way about insurance products that promise investment opportunity .
Yes, certainly a risk. As you can see, lowering the tax rate eats up a lot of the contingency very quickly.
Nice analysis! The big problem is most VUL products are not great or even good, and a very small amount of docs are even qualified to assess them. It seems like this one is pretty optimized, but what are the odds a random life insurance agent is going to sell you one this perfect? The odds of not being ripped off are so small so I think generic advice like ‘don’t but a VUL’ is solid. Asset protection may be the best reason to buy one of these if it applies to you.
I had a VUL (from protective w mainly oppenheimer funds), WCI help convince me to cancel it. I kept it for 6 years. It was 24,000 a year premium. One million in life insurance. 3-4% withdrawl APR on growth, premiums paid till 65 (30 years). I am so glad I cancelled as I was just not able to do enough taxable with money draining into VUL every month. Initially I thought I could, but took me 5 years to realize why I am not putting money into taxable.
Now I feel more relaxed and feel I can sleep better too for my future is not dependent on 6-7 decades of life insurance changes.
Recently an article came out that showed cost of insurance has gone up because not as many people are signing for insurance as in past. Guess what- no one is grandfathered in 🙂 and everyones cost goes up.
VUL only made sense if I had more than 10.5 million inheritance to pass to my heirs. If I do reach there I think I want to stop working and spend more time w charities or travelling.
Talking w my insurance agent-family friend was a backstab. Never mentioned any commissions which could be up to 150% of the first year premiums. Always said tax free withdrawal while avoided saying not interest free.
So glad I dont have it now. My wife was a trooper, sat down w me, listen to me, ran the number w me, supported me.
The only silver lining (pretty small knowing myself) was that VUL made me put away 24,000 a year into an account. What if I have not joined VUL and have not put away those 24,000 a year and rather spent it? But I think knowing myself I would have saved it but who knows.
150%! That’s higher than I’ve seen but who knows as I don’t sell the stuff. I know whole life generally ranges from 50% to 110%.
Probably you are right as always
http://www.annuity1.com/as_palette/docs/pfg/contracting/pfg_producer_commission_schedule.pdf
Wonder what is the APR for withdrawal on the growth with the policies that you showed in your example
I’m not sure what you mean by “APR for withdrawal.” The term APR is usually applied to loans. Are you thinking SWR?
http://www.bankrate.com/finance/insurance/life-insurance-agent-make-1.aspx
>>Talking w my insurance agent-family friend was a backstab. Never mentioned any commissions which could be up to 150% of the first year premiums. Always said tax free withdrawal while avoided saying not interest free.<< I wish I had a dollar for every person who had told me that they bought a high-commission product from a "friend".
“A friendship founded on business is better than a business founded on friendship.”
-John D. Rockefeller
This may very well be a reasonable product for some select few. Maybe I am in that category, but I’m not sure. I am in ortho so have a relatively higher salary. My investment vehicle options are limited to 403b (plus match), 457, HSA, (backdoor) Roth IRAs for wife and I, and kids 529s. Without the 529s that is about $53k, plus $9k match. As a hospital employee, there is also a performance incentive plan that increases the longer I am there (was about $4k this year, my first year in the plan).
Between 15 year mortgage payment (total cost of about 1.25 my annual salary) and aggressively paying off student loans, we have yet to start a taxable account, but that’s the next step after the $250k student loans are paid off in 3.5 years after fellowship.
I was with Larson in residency and fellowship, then parted ways several months after starting practice. My advisor had spoken ill of whole or universal life early on (which I told him from the beginning I was against), and then 3-4 months after I started making real money he pushed VUL on me. Coupled with the fact that he had no idea about student loan refinancing options, I became leery of him pushing me into VUL with no consideration for having $140k at 6.8% interest and $110k at ~ 3.825% interest. I also started running the numbers on the AUM charges and decided to do it on my own.
My advisor painted a similar picture to what is above, but came at a time when lots of posters on this site started sharing similar stories about their Larson advisor pushing VUL on them (and some very inappropriately by the sounds of it).
Anyway, thanks for your work WCI. It is appreciated.
I agree that even discussing buying a VUL with you while you have 6.8% student loans outstanding is inappropriate. And yes, if you’re not saving enough to fund a taxable account, you’re not saving enough to fund a VUL.
2 comments…
1. The long term commitment part is huge. Not having flexibility with your money is one of the main reasons I didn’t get into this stuff. Also, the fact that I was going to need to keep contributing at a defined rate. I don’t know what my future holds…none of do even as owners. Even though it made numbers sense I never wanted to pull the trigger. Glad I didn’t.
2. There is one benefit that I didn’t see mentioned. (Maybe I missed it in the lengthy post) This doesn’t apply to all states (as far as I know) but VUL is far better protected from creditors, lawyers, and lawsuits than a taxable account in my state. Something to consider if you are in a high risk area of medicine and your state is protected.
The problem with that protection is that your contributions aren’t protected but necessary. Easily can turn this situation into a liability instead.
Rex, I don’t understand your statement. Number 1 is a liability. It is not a good thing. That’s why I don’t have a VUL policy despite having a larger taxable account than all of my retirement accounts combined (don’t get me into all the problems with that statement…I already know them…it is a bad and good problem to have). Sorry, but we all don’t have 200K in tax deferred accounts like WCI.
Number 2 cannot be turned into a liability as far as I know. Protection of assets is protection of assets. In the state I live, my home and a VUL cannot be taken directly from me. Period. A taxable account can be stripped from me in the right/wrong situation.
Maybe I wasn’t clear
Let’s say I purchase a policy with premium of 50k. The following year there is a judgement against me. Well the policy still needs premiums for many years or it collapses and those premiums must come from my taxable account. There really isn’t “protection” in a real sense until it’s “self funding” and that’s many years. You might feel differently.
Yes, that’s a real risk, especially for someone that would prefer to lump sum everything into the VUL but is forced to make it a 7-pay or 10-pay and so just gradually moves money from the taxable to the VUL.
Although, to be fair, that risk is very low since the likelihood of being sued above your limits is incredibly low.
Is there a link to the calculator or do you have to be an advisory client of Larson ?
I don’t have the calculator, no.
It was briefly mentioned in the post, but yes, in many states cash value life insurance receives substantial asset protection, although that benefit is very rarely used.
Great article. I noticed you put in 7.5% nominal returns with someone in the worst tax bracket. That is when the VUL can shine.
What you should do is look at what happens at 6%,5%,4%,3%,2%, and 1% nominal returns. The VUL versus term insurance+index investing will then favor the term insurance+index over the VUL. I would even say it would work for that plastic surgeon making $1 million a year.
If you look over the last 16 years since 2000 the s and p 500 index has given about 5%, so the insurance+index investing is the better deal.
Lastly, if the returns on the s and p 500 go to 10 or 15%, the VUL will be the winner. Just saying.
Since the VUL is so damn complex and the risk of the lapsing the policy is easy to do as there is a 500 page prospectus, I believe it is best to avoid this thing. There is more to go wrong than to go right.
I’m sure insurance agents don’t care that we have figured this out, I don’t really care. We docs need to protect ourselves from predators.
If tax rates go to 70% I would consider the VUL.
Yes, it would have been interesting to have discussed the effect of returns on the decision (although this post is way too long already as it is.) However, it’s hard enough to predict future tax law; predicting future returns is nearly impossible. I thought 7.5% long-term was reasonable.
You are correct on the fact that higher returns would favor the VUL and lower returns would favor taxable.
I’m pretty close to exactly what you described as the ideal candidate for VUL. I looked at a good policy (not as good as the one you described) for a year and then I decided against it. The main reason is something that you sort of touched on. If I’m making that much money and I don’t spend very much, I can retire quite early. The VUL only makes sense if you fund it to the max for a very long time. In the case of many high income earners, that may not be part of the plan.
I’m much happier if I just retire earlier and don’t have to worry about coming up with a massive premium every year. I probably won’t fully retire, but I know that I’m going to practice more fun and definitely less-well-compensated medicine when I “retire”. My income will drop a lot, but by then I shouldn’t have to care (assuming everything goes according to plan — we never know what the future holds).
And I think that actually takes a fair number of high income earners out of play. If you don’t intend to work long enough to be able to fund a VUL for a good long time, then you probably shouldn’t do a VUL.
As the example in the post shows, a good long time can be as little as 7-10 years. But I agree that I don’t like having to make commitments that don’t have to be made.
Yeah, I actually requested an illustration for a VUL if I just did it for 15 yrs (that was my condensed version). It did not look as good as what you mentioned in your post, but it was a different VUL.
But your post did make me think of another option that I hadn’t before considered. What do you think of someone who is a good candidate getting a low face value VUL policy (so you’d need separate term, say $500K) just as a way to diversify the tax treatment of your retirement income and and hedge a little against massive tax increases in the future.
All loans in the US are tax free so there are other ways to get tax free loans and probably at better interest rates.
Also keep in mind Trumps plan is to get rid of the tax benefits for insurance (I’m not a trump expert nor think he could pass it but one shouldn’t assume tax changes can only benefit insurance).
1. Can you elaborate on the point about loans. Specifically, lets say I have a $1million dollars of appreciated mutual funds. If I want to spend that, I have to sell and pay taxes. On the other hand is there any way I that I could get a $1 million loan using the stock as collateral and if I default on the loan (e.g. at death), then the bank can collect $1million of stock of from my estate.
I’m obviously skipping a few important details in the plan, but hopefully you get the idea. Is there a way to do this?
2. Yeah, I realize that VUL could be treated differently too, that’s why I suggested it as a hedge. The idea being that you would have some regular taxable accounts and other investments (e.g. real estate). Just a diversification of sorts.
I think the key with this sort of decision is to keep it to a reasonable amount. It’s like the folks who want to buy gold. At 5% of your portfolio, it seems reasonable. At 30%, it doesn’t.
Yeah that’s exactly what I was thinking. If I had a time machine I’d go back 10 yrs and buy a VUL like this for a small amount, there is a very good chance I would. Probably need to crunch a few more numbers to be sure
The only caveat (and I think I actually checked this out) is that the VUL doesn’t scale precisely. In other words, if I remember correctly, lower death benefit VULs had relatively higher fees than higher death benefit VULs.
Do you know if that is true for this specific VUL (i.e., if we reduced the death benefit to 1MM, would the graphs you posted look exactly the same but with different numbers on the y-axis).
I don’t know the answer to that but you’re right that the smaller the policy, the higher percentage that gets eaten up by fees. I don’t know if it is significantly higher though.
I’d use Larson’s calculator to compare it to taxable under various scenarios and decide if you think it’s worth it. The alternative, of course, is using that taxable account to pay for Roth conversions of your tax-deferred account.
Can you explain what you mean by use the taxable account to pay for roth conversions?
It doesn’t really apply to me since I have nothing I can convert (other than backdoor Roth which is done annually). Nevertheless I’m trying to understand what you’re talking about.
If you’ve got a retirement account that you can convert to a Roth and the conversion requires a tax of $X, then what is the difference between paying $X in cash or selling some appreciated stock (which you will have to pay tax on) and then using the proceeds to pay $X.
Unless you don’t have $X available in cash, why else would you use the contents of the taxable account to pay for the conversion? I don’t get it.
Also can you explain how you set up Roths for your kids? How do they earn the income to put in?
Okay, let’s say you’ve got a $500K Roth IRA, a $1M traditional IRA, and a $500K taxable account. You can move $100K from the traditional IRA to the Roth and use $35K of the taxable account to pay the bill on that. Afterward you’re left with a $600K Roth IRA, a $900K traditional IRA, and a $465K taxable account. Same amount of money really, but you now have more tax diversification.
It’s about the future. If you spend it that year it’s all the same, but if you don’t spend it for 20 years, then it’s a big difference.
Yes, but in your scenario, you’ll probably have to sell more than 35K of stock out of the taxable account to get the 35K to pay the tax bill.
Why not just use $35K of cash? I guess if you don’t have it, that’s one thing. But Roth conversions are generally planned events, so you can easily save up for them in advance. And like anything that you know you’re going to have to spend money on soon, its better to keep it cash than it is to invest it and then have the investment decline in value when you actually need to use the money.
You mean cash in your taxable account? Of course, use that before selling stocks, especially stocks with a gain. Remember, if it’s not in a tax-free account or a tax-deferred account it’s by definition in a taxable account, no?
Yeah, I think that may be the source of the confusion. I seem to remember that in other posts you have written when you referred to a “taxable account” it sounded like you were referring to a brokerage account with stock and bond funds.
But I guess even one’s checking account is a taxable account. So if you mean literally anything that’s not in a retirement account is by definition your “taxable account”, then what you’re saying make sense.
If you have money in your checking account (and have already maxed out your retirement accounts for the year) you can do two things with it- you can invest in taxable or you can pay for Roth conversions. Really the same thing but in certain situations one is more advantageous than the other.
No comment.
I bought a VUL about 6 years ago. I’m in a highly paid subspecialty, although will never be near $1 million/year. I have $53K in tax protected space at work as employed doc + backdoor Roths + 529s. I’ve never been entirely comfortable with my VUL. After about 2 years, I sent it to James Hunt at evaluatelifeinsurance.org to take a look at it. That was $100 very well spent. It does seem my policy has reasonable costs compared to others.
I at first bought a $3 million policy with plans for premiums of $7500/month (I should have seen the problem as the salesman wanted me to buy over twice that much!). I still was able to put some away each month in a taxable account, but I became concerned that I was putting too many eggs in one basket, as it became clear that this policy would be worth more than all my other retirement accounts combined. So after about 3.5 years, I decreased the death benefit to around $2 million. This didn’t trigger the surrender charge, and it lowered the insurance costs (although I still end up paying commission on the original $3 million policy). My premiums are now just under $5K/month, which is the maximum allowed to allow this to not be considered a MEC (which would cause it to lose all the tax advantages). So this is now a smaller part of my nest egg, and more comfortable. Some days I still wish I had just eaten the $47K surrender charge and been done with it. But other days, like today when WCI shows how a VUL just might work out, I’m more comfortable that I just shrank the policy and didn’t bail out entirely.
By the way, my plan was illustrated to have me pay in for 20 years, (from age 33 to 53), then start taking money out at age 55 (possible retirement age). WCI, did you get any illustrations from Larsen about pulling money at an earlier age such as 55? One of the selling points my salesman used was that this would be a good way to fund early retirement prior to me having access to my tax-advantaged accounts.
I didn’t ask for that, but it could be run. Sounds like you had a VUL sold to you to me. $15K a month? That’s ridiculous for someone making less than $1 Million. Teh bit about “funding early retirement” is also silly given all the other ways to do that such as dividends and interest, rents, SEPP, Roth contributions, taxable account etc.
That’s also a lot of years for the loans to possibly crash the policy
You should google unmet promises life insurance (that article was written by people who promote it by the way).
In this particular policy, there’s a rider to assist with the loans (and poor market returns) crashing the policy. I’ve read the article about unmet promises before. There is some risk there, no doubt, and plenty of undesired complexity.
Funny thing how cost of the rider is disclosed at time implemented and not ahead of time….might not be much protection and certainly wipes out any chance of death benefit.
Yea, I don’t like that aspect of the rider either. I wish it were simply that when your cash value hit a certain level the rider kicks in automatically and just takes what’s left of the cash value. That would be real insurance. Things go bad….you walk away with nothing but owing nothing.
It’s actually worse than that. They know you want to avoid the tax hit so paying them might be cheaper and they can use that to their advantage. It’s actually ridiculous they don’t give u the cost.
Whole life insurance is hands down the best insurance product for most well to do folks. For the rest, term life makes most sense. Roth and HSA along with 529 accounts are gifts from government for well to do folks. Traditional IRA’s/401 type plans can be a nightmare / tax bomb ready to explode for some very well to do folks. So make sure you keep plenty of money in taxable index funds, and enjoy benefits of tax harvesting and ability to sell them or pass them on to your family on tax favored basis.
If you are still under age 50 and in good health, and are conservative investor then make sure you have plenty of whole life insurance. You will be glad you did.
You’re very vague. It’s not clear what you mean by “well-to-do.” In the 7 figure range, where most high income professionals will end up, I’d argue the best life insurance product is term life. It’s certainly the only one that is mandatory for most. 99% of people are going to need term life. 1% are going to need any permanent product at all. If you’re one of those who wants a permanent product, well, it really depends on what you want it for.
Upon what do you base your opinions about all of the “well to do folks”? I don’t believe you are an insurance agent because they are far more articulate.
Less than 20% of people keep whole life inforce until death. If more people kept it then returns would plummet. Out of those who do keep almost all of them that I’ve talked to say they could of done better but it’s ok. They wouldn’t do it again but aren’t mad about it. It’s few who talk about how great it is and most of those mistakenly think they get both the cash surrender value and the death benefit or have some other misunderstanding.
The aversion to putting your free cash into a taxable account surprises me. The tax arbitrage alone is worth it, but don’t forget about tax gain harvesting, tax loss harvesting, gifting opportunities, step up basis at death.
A young doc with a family needs more life insurance than he can afford. Why pay more for less coverage.
Complexity favors the seller.
What arbitrage are you talking about in a taxable account. First you earn the money, and pay your full marginal rate on it. Then the money earns money and you pay ST capital gains, LT capital gains, qualified dividend, and full marginal rates. What’s the arbitrage?
I too purchased a VUL and have since regretted. It was sold by a former friend who I’m sure earned a hefty commission. He initially asked me “how much extra money would you want to put into a Roth IRA if you could?” My answer was 50k per year, and so he designed the policy to the MEC limit with this annual premium amount (about 2.1 death benefit).
Only after purchasing did I realize what a crappy investment this was. Even though I qualified for the best rate schedule because of excellent health, I didn’t take a close enough look at the investment options within this thing. The best fund is an S+P 500 Index fund with…expense ratio of .45!! Multiple times more expensive than a Vanguard equivalent. And I won’t even mention the other options with ratios of mostly over 1%.
I too hired James Hunt from evaluatelifeinsurance.org to do an assessment. His analysis is that my policy was not the worst out there, but because of the mostly crappy investment options within the plan (Ameritas), I would have been better to buy term and invest the difference. I paid into the plan for 3 years, but stopped my premiums as of last year. By Mr Hunt’s analysis, the point at which the cash value will equal what I’ve paid into it (and the surrender charge goes away) will be about year 10 if it grows around 4% per year, at which point I’ll probably cancel the policy and get my $150k back, since hopefully I won’t still need life insurance at that point if my net worth is high enough.
I’m trying to look at it like I’m letting the company borrow my money to provide me 2 million + in life insurance until I cancel the policy, at which time I’ll get back exactly what I put in, but what that doesn’t take into consideration is the opportunity cost of that 150K and what it could have grown to in the meantime in a taxable account.
I’d advise buyer to certainly beware!!
Yup, a VUL is NOT a Roth IRA. Neither is whole life as I wrote here:
https://www.whitecoatinvestor.com/8-reasons-whole-life-insurance-is-not-like-a-roth-ira/
The arbitrage happens with a taxable vs. tax deferred account. If in early retirement you have a large taxable account you can tax gain harvest and get the money out at potentially 0% federal tax. If you tax loss harvest all along the way, you are partially off loading your losses onto the US taxpayer, especially for the yearly $3000 write off against regular income. The losses are yours to use forever unless offset by CG. If all you have is a large tax deferred account, the money must come out at current tax rates which are likely going up. You can tailor your withdrawals to the current tax law. If marginal rates go up , the taxes on your 401k/IRA could be substantial.
Hard to beat an intermediate, low fee tax free muni bond fund in a taxable account for the bond portion of your portfolio. Capital gains and dividends, despite their tax favored status, still go to your AGI.
If you are even close to being able to get money out at a 0% federal tax (i.e. not pay LTCGs) then you should not even consider a VUL. This is for folks who, at a minimum, have a higher expected income in retirement than the 15% tax bracket.
in addition, tax loss harvesting is the best cure for loss aversion I can name.
I simply cannot conceive how a life insurance product , with all its’ complexities and fees, could compete with taxable account for investments.
You can’t conceive it? Did you read the article? The way it works is the insurance costs can be less than the tax costs. If you can’t imagine it in your own situation, imagine if you had a retirement income ten times higher.
Still doesn’t mean a VUL would be better with high income. Need a lot of insurance company non guarantted illustrated factors to come true. Possible sure. A good bet not so much so.
All else being equal, it would be better with a high income than a low income, although not necessarily better than a taxable account, as illustrated by my own case.
[Comment edited in 6 of the 7 places it was placed on my website. The original was left up on the Larson Review post. Christopher- I’m sorry you had a terrible experience and obviously feel a need to warn other doctors about your bad experience. I would caution you on two points:
#1- Don’t spam my website or I’ll just block your IP address. Don’t place the comment on a half dozen different posts nor in multiple places on the same post.
#2- Keep things factual. If you stick to the facts and clearly identify your opinions and feelings, you’ll keep both of us out of trouble with regards to libel laws. Larson in particular takes these sorts of comments very seriously.]
I am about 9 months into a $2M Variable Life Insurance Policy. I am contributing $2K a month and the aim was for me to find a form of tax haven as I can’t use a Roth IRA due to income level and my 401K is already maxed. So I thought this would be a good route but in researching further its clear that this is not. I have a $10K surrender with an accumulated value of $11,486. What’s the best way for me to exit at this point? I read something about transferring to a Vanguard account so I could right the loss off in taxes. Thanks.
# 1 Fire your “advisor” who is really a commissioned salesman in disguise. Your $10K surrender is water under the bridge and most of it went to him as a commission for giving you such terrible advice.
# 2 Read this post for some options on dumping this. It’s about whole life, but it’s basically the same process. https://www.whitecoatinvestor.com/how-to-dump-your-whole-life-policy/
Hope you get to keep $11K of your $18K, not $1K. Can’t quite tell from your post. Probably the latter.
Count yourself lucky that you found this information only 9 months in. Look at your surrender as 5 months of “contributions”. By the way, you CAN contribute to a Roth IRA. It’s called a backdoor Roth – do a bit of research on this site and you’ll find plenty of information.
As to “tax havens”, we sometimes let the tax tail wag the wealth accumulation dog. Taxable accounts can be perfectly appropriate in a well-rounded financial plan. Read 10 Reasons You Need a Taxable Investment Account at bit.ly/2dC0RHf
Thanks so just to insure I exit this correctly 1) given I am less than a year I should bail now, move my money to a better return lower fee investment vehicle and purchase term 2) My biggest question is how I handle the surrender. Sounds like I can write it off in a tax loss if I covert to a VA in a 1035 exchange? Or a backdoor Roth IRA?
Let me know if I am picking this up correct and thanks…expensive and painful lesson learned here.
Why don’t you get an opinion from a fee-only CFP first? Most offer free consult and even if you pay for an hour of time, it’s kind of minimal given the amount of exposure you have with that policy. It’s difficult to give specific advice that is really helpful to your particular situation without knowing more.
btw, a backdoor Roth is not an option for this “investment”.
There is no tax loss until you sell the VA. You can’t claim a tax loss on life insurance. Thus the reason for the exchange to a VA.
Great post and good analysis. However,I do not see a scenario where federal tax goes up over time for high-income earners. I don’t know about you, but this is the easiest money the government can get and I fully expect the tax rate for the top 1-5% of earners to be going higher over time…..
Never mind that the house voted this week to lower taxes?
If you firmly believe you’ll be in the top bracket in retirement then you should lean toward things like Roth conversions and VUL. But bear in mind that most docs are NOT in the top bracket in retirement.
I have 2 Northwestern Mutual Adjustable Whole Life policies (1M paid for 8 years and 1.65M paid for 6 years). Currently they are worth about 20% less than the premiums I put in. After all the reading on WCI and elsewhere, I have serious regrets about these policies. I do max out my 401K, have a good amount in taxable accounts, and put money away for 529s. But if I didn’t have the whole life premiums, I would pay off student loans and mortgage faster, as well as put more away for 529 and backdoor Roth. So… I talked to our UBS financial advisor to see about converting to Variable Annuity (still trying to figure out what that is). They, however, are recommending exchanging the NWM policy for a 1.8M paid up VUL policy from Lincoln and purchasing term insurance. Is a paid up VUL + term better than VA + term? They seem to think so. This whole thing is confusing as heck! Thanks so much for your help!
Not surprised you have serious regrets with a 20% cumulative loss after 6-8 years. If it makes any difference, your scenario is typical. Most people don’t break even for 10-15 years because they purchased policies designed to maximize the commission to the agent.
BTW, your agent is a jerk to sell you this when you still had student loans.
And you need a new financial advisor.
I’m really sorry to be the bearer of bad news, but rest assured, you are nowhere close to being alone in this situation.
DO NOT BUY THAT VUL until you either learn a lot more about this stuff or hire a fee-only advisor. You don’t have to rush anything.
It would be a much fairer comparison to change the method of accessing the money in the taxable account. Rather than taking it out and perhaps paying capital gains tax, one could borrow against the balance. Brokers usually will cap the proportion of the value that one can borrow but taking relatively small percentage amounts out each year while the total pot grows could easily leave one well under the cap.
You would owe interest on the borrowed amount just as you would with the insurance policy. But you would not be paying insurance costs, administrative fees and commissions for a death benefit you don’t need. You would not have a long initial period underwater. You could stop contributing to the brokerage account anytime you wanted during the accumulation phase. You would not have to worry about changes in insurance costs.
In the illustration are those results including the maximum contractual costs? Or only the current projected rates? Can you run the illustration at the maximum rates?
That would be an interesting comparison. Care to do it?
Maybe I will for the taxable account and margin loan maneuver.
For the VUL illustration is that with guaranteed maximum costs of insurance and maximum fees? If not, can they generate an illustration at those Maxima?
Does anyone have knowledge about the TIAA CREF VUL which (they claim) has no commission? They say rates have never been below 3.85%. Clearly all the issues with funding it regularly, less flexibility, etc, exist. But if the numbers they showed me are correct, the difference between premium and surrendered cash value is about the same price as a term policy for the same amount.
As VULS go, my understanding is the TIAA-CREF VUL is one of the better ones. Are you sure a VUL is right for you?
Nope! Not sure. But your article was very helpful in helping me become more informed. I will read it again. As a W-2 employee, definitely looking for good ways to find tax free investments which is what caught my eye. I’m also in need of life insurance now, which is how this whole thing came up.