By Mary Beth Storjohann viaÂ Iris.xyz
If youâ€™re like many of my clients, at some point, an insurance salesperson will approach you and try and convince you that you need a universal life insurance policy. They may even call themselves an â€śadvisorâ€ť or â€śfinancial plannerâ€ť in the process.
In some cases, theyâ€™ll volunteer to do your financial planning for you, for free, if you only buy that universal life policy. Iâ€™m here to tell you that theyâ€™re wrong. Theyâ€™reÂ notÂ fiduciaryÂ financial planners or advisorsÂ (and they get a nice fat commission check when they manage to sell policies to you). And their â€śfinancial planningâ€ť is far from free because youâ€™ll overpay for insurance you donâ€™t even need.
Most people do not need universal life insurance, and those who buy universal life are proud owners of a financial product that is not the best fit for them.
This all may sound hard to believe because life insurance salespeople do an amazing job at pitching you on their products. They are salespeople, after all â€” itâ€™s their job to sell you on what they have to offer!
One of their favorite lines is that universal life is an investment that can both protect your familyÂ andÂ increase your wealth. While the right kind of life insuranceÂ canÂ protect your dependents from financial hardship should you pass away while they rely on your income, insurance isÂ notÂ an investment.
Itâ€™s a product designed to do just that: protect your family from a hardship they might otherwise face if you (and your income) were not around to provide for them. If you want to invest, you need to contribute to your 401(k) and Roth IRA. If youâ€™re maxing out both those accounts, consider opening a taxable brokerage account and fund that as well.
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