Is Universal Life Insurance a Good Investment?

Generally speaking, does the account value within universal life policies provide an acceptable investment alternative to today's insurance buyer?

Generally speaking, no, universal life is not an acceptable alternative for today's insurance buyer. The reasons and assumptions behind this generalization are as follows:

1. There are better contracts available as long as you are insurable and will have no trouble obtaining new insurance at acceptable rates.

2. You do not intend to commit suicide or commit fraud by giving false answers to any of the questions on any of the papers you complete to obtain a different policy.

3. On the basis of historical averages, you cannot expect the interest rates provided by the insurance companies to be more than 2 to 3 percent over the inflation rate.

4. An interest-only investment account provides insufficient investment diversification for large amounts of capital within a life insurance policy that is likely to be the longest-term investment capital that a policy owner will possess-lasting for the lifetime of the insured.

5. The insurance company creditor risk assumed when investing in the general account of an insurance company is unacceptable and unnecessary. Too many insurance companies have failed to survive as long as their insurers.

6. You do not have control over the investments in a universal life policy.

7. The policy is a single-pocket policy. It offers only the guaranteed interest account and provides no method of changing that investment if investment needs or desires change.