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Is UVL valid option for couple who can not invest in ROTH IRA?

Hi, we are considering investing into Universal Life , or Variable Universal life, or Whole life insurance. We can not invest into ROTH IRA due to income level. We are both 35 years old and are looking for this to help us make it between 55 when we would like to retire and 60 years of age when we can pull money from our 401k and IRA. Are these good options or should we stay away from them considering the fees? THanks

Public Comments

1. Since you are only 35, you have 20 years before you might need this money. It makes more sense to make regular equal payments (use the "term life" premiums!) into an aggressive growth mutual fund. You will average 10-12% growth over a period that long, and are more likely to come out way ahead over the insurance option. The indicating evidence for this is that the profit for the selling agent is much higher on the insurance than the fees are on a reasonable mutual fund...
2. Depends on the insurance needs, first of all. You need to compare what the cost of the insurance is compared to a straight term policy. Then see if you can find a way to compare the actual investment returns. UVL's have massive commissions for the agents, compared to anything else they sell. Typically, your cash balance after 12 months is $1.00. Literally. Only after that can your money start to grow. Is there anything under the sun you can think of, where you could create your own business? It only needs to be marginally profitable, but you could use that to set up a SEP IRA and funnel as much cash as possible from the business into that. Do you have any kids? Do you really need that much insurance? You should seek out a fee-based financial planner. One where you pay him directly for his time spent in working with you. Not one who is paid on commission based on what products he can steer you into. I'm assuming you've completely maxed out your 401K contributions too? Even if you're past the matching, if your income is too high to do an IRA, you still get the tax advantages. I know people say use 401K to the match max then go to a Roth, but if you can't do a Roth, keep going on the 401K til you can't, then look elsewhere. Heck, in your position, you could even look at real estate. Your gains can be leveraged, since you'd finance the bulk of any purchase, and using 1031 exchanges, you can avoid paying gains taxes for decades, and potentially through your own death (your heirs inherit real estate at it's stepped-up value, what it's worth on the day you die). If done right, and with a good management company, you can lose money on paper, save money on taxes, pay someone else to manage it, and just build a portfolio.
3. Don't buy a truck from a shoe store. Don't buy an investment from an insurance company (with one exception, those who are retired and very risk adverse & require some type of guarantee). You will gain more from a good low cost, tax efficient (low turnover) mutual fund. If you want tax free investments, 35 is an ok age to start putting some money into muni bonds.
4. You should definetly stay away from life insurance as a way to invest for the future. Even if the cash value invests in securities, they have high fees that is deducted from the assets of the cash value. Plus, if you were to die someday, you lose all the cash value. If you are looking to buy life insurance, then buy a 20 year or a 30 year term. What I suggest is invest in Traditional IRAs. You will pay taxes on withdrawals on the gains and the contributions you made tax-deductible. You will not owe taxes on the contributions that you did not make tax-deductible. In 2010, you can roll it over to a Roth IRA. Its only 3 years away and any withdrawals after age 59 1/2 are tax-free from a Roth IRA. I strongly recommend that you invest systematically. That means you invest the same amount every month. If you understand the Dollar Cost Averaging concept, by investing every month, you lower the cost per share.