EIUL vs Mutual Funds which one is better?

Question

Equity Index Universal Life is a combination between investment and Insurance versus regular Mutual Funds, which one is better for long term-safe investment

Answer 1

In addition to the excellent answer given by the first responder, I would like to add the following.

If you were to lock yourself into an EIUL, you are at their mercy for providing decent returns, which they probably would not. If however you invest in mutual funds, if the funds you invest in do not perform up to your expectations, you can switch to another fund or funds. Also you have the advantage of picking and choosing which funds you wish to invest in. For safety sake and to maximize your overall returns, it is wise to own a select variety of mutual funds, all with good track records and different investment strategies. Remember 70% of mutual funds under perform the market in general so you must be somewhat choosy.

Answer 2

If you are looking simply for a long term investment you are must better off with a low fee mutual fund over EIUL. When you use an insurance product as an investment you are subject to the same fees that are associated with mutual funds plus the additional fees that are associated with the cost of insurance. If you do need insurance also you will get much more bang for your buck by using mutual funds for your investments and low cost term insurance for your insurance. I sold a lot of this stuff when I was with American express financial advisors. I was new to the business and trusted my employers. Now that I've been in the business for 15 years, I see the dis-service that I gave to my clients. The person who is trying to sell you on this Universal life policy will get a huge commission if he makes that sale versus a much more reasonable commission if you purchase the mutual fund. He/She will tell you about how term insurance is like renting insurance where universal is permanant insurance. He/she will also tell you that most term insurance policies expire unused. These are just a couple of the tools that he/she will use to influence you into buying the product that will get him/her a $1500 - 2000 commission (depending on the size of the policy). Ask him/her specifically what is the commission difference between the 2 products. I hope this was helpful. Good luck.

Answer 3

STAY AWAY FROM ANY LIFE INSURANCE PRODUCT PRESENTED AS AN INVESTMENT PRODUCT.

These products are very expensive (internal fees and commisions). You will "eat up" a lot of your earnings in fees.

Better way;
Buy a 30 or 20 year certain Term Insurance from a reputable life insurance company and invest the rest in an index fund from Fidelity, Vanguard, Schwab etc in the S&P500 index. YOU'LL BE MILES AHEAD!

S&P500 funds beat 80% of all "managed funds" over time.