A Qualified Yes for Melding Insurance and Stocks; Consumer Advocate James Hunt Says Low-Cost Variable Life Can Be a Good Choice With Interest Rates So Low
A lot of Americans buy life insurance and a lot hold stocks. But only a small number own a product combining the two, called variable universal life insurance, or VUL.</br></br>It's a product that has long been out of favor with many financial advisers. But these days it's a better choice for some families than other combinations of insurance and savings, says James Hunt, longtime insurance specialist for the Consumer Federation of America.</br></br>Variable universal life is a type of permanent insurance--designed to remain in place no matter how long the policyholder lives, unlike term life. Permanent life insurance combines a death benefit with a tax-deferred savings component that becomes tax-free at the death of the holder.</br></br>Variable universal life, unlike other permanent life insurance, allows the holder to select from a menu of stock and bond funds.</br></br>For years, VUL got a thumbs-down from many financial advisers and insurance specialists, largely because these policies typically come with steep insurance charges and high investment fees. Mr. Hunt has been one of the critics of those high costs.