Still learning about insurance, do I keep my VUL?

This is my first post. I'm at a point in my life where life insurance matters now. I've haven't taken the time until now, to understand how it all works.

One thing I did do (thanks to Dad) was to get a VUL policy in 1994. I've been paying $50/mo to it ever since.

By researching online, it seems that most pros don't care for VULs in most situations. I'm wondering if I'm an exception possibly. I'm still not completely clear on all of the inner workings of my VUL but I can offer these stats:

Death Benefit: 107829
Policy Value: 7829
Net Cash Surrender Value: 7829
Death Benefit Option: B
(I'm not sure if the Option is something generic to all VULs or if it is specific to this one. In this case it means the death benefit is the face value plus the policy value)

I'm going to need a greater amount of coverage though. Does it make sense at this point to stay in the VUL and increase the coverage? Would I be better off taking all the money, investing elsewhere and getting a term policy? Or perhaps I stop paying and let the policy value cover the monthly payments until it is depleted and get a term policy to supplement this one.

Is there even enough info here to make a recomendation?

Welcome to the forum;

I'm not an inurance pro myself, and I'm sure they'll weigh in on this soon enough, so I'll get my two cents in now. My initial thought after looking at your post is that your current policy may be dangerously underfunded. If you have been putting money into it since 1994, any decently perfomring subaccount (the mutual fund(s) the cash value is invested in) should have at least broken even and hopefully been profitable by now. By my math (168 months X $50), you've put in approximately $8,400 and still have a cash value of less than that. This suggest to me that the costs of the policy -- insurance, adminstration, etc. -- are increasing at a rate faster than growth of the cash value. Generally the cost of insurance alone increases every year. The eventual outcome if this trend continues is collapse of the policy.

I would guess you have maybe three choices here, and I'm sure that those "in the know" will comment on this in more detail:

1. Stay with your VUL and increse the coverage, but be prepared to "heavy up" on the monthly premiums to keep the policy in force. I think at a minimum you should be putting in $100/month.

2. Consider taking your current cash value and exchanging into a more traditonal whole life policy. Again though, I would expect you should be prepared to pay a larger monthly premium. I don't think $600/year will buy a very big policy.

3. If the money is an issue and you need a sigificant amount of insurance, the $600 a year your paying now could probably buy substantially more term coverage than your current policy. However this is a short to moderate term solution, as term rates do go up over time, and your question suggests that your are looking for long-term coverage.

Hope this at least starts you in the direction of working this out. Good luck!

Oops, I typed the wrong start date. It was actually 1996. In all it's been 141 months so far.