Accumulation VUL Vs. Whole Life

[testguyct]

I am 45 years old, and have a John Hancock Flex V Scheduled Premium Variable Life $250,000 guaranteed whole life policy that I bought back in 1995 from a friend who was just starting out in the business. I have been contributing $150/month, and I currently have an account value of about $50k. I was given the opportunity to convert this whole life policy to an "Accumulation VUL" policy. The agent had printouts for 2 scenarios. The first had an initial death benefit of $800k, with $150/month premium. The scenario was based on "Assuming Current Charges and an Initial Gross Rate of 8.00% (Net 7.75%)". The second scenario was to illustrate if the policy was used as a retirement investment vehicle, with an initial death benefit of $325k and the assumption that $150/month premium would be paid until age 65, then starting at age 66, withdrawing $29,032/year, until age 80. I know next to nothing about life insurance, and I just want to make sure that I am not getting into a bad deal.

Thanks in advance.

 

[DHK]

Variable policies include investment sub-accounts (like mutual funds) that can include the (very) possible risk of market losses within your cash surrender values.

So, with any Variable Life policy, ask what happens when the market does a downturn - like in 2008.

These illusions (I mean "illustrations") show a steady return year over year... and can make these policies look "too good to be true".

The are... according to the illustration.

I am biased against VUL policies because of the potential of market losses within the contract.

However, you already state that you have a "John Hancock Flex V Scheduled Premium Variable Life" contract already. Your FACE VALUE is "guaranteed"... as long as you pay your premiums. Because it has a set schedule, they are calling it a "whole life" policy.

My father has a similar policy from MassMutual (Variable Whole Life)... but I can't tell the difference between this and a VUL. Both have securities and the potential for market losses.

In short, as long as you know the "moving parts" of your contract, what can affect your cash surrender values and death benefits, and you are comfortable with the level of risk in the contract, you should be okay.

Do you have a need for additional death benefit? (Almost everyone does.)

Will your new contract put you in a better position than your current contract does? This is what your agent/advisor needs to spell out very clearly for you.