Originally Posted by
bugman61
Diversification is great, as long as the vehicles/investments you are in are actually good. The GVUL at best provides minimal tax savings, likely actually provides a tax penalty, and charges a 2.5% fee.
No thanks. I’m happy to take the imputed income savings and invest elsewhere.
You nailed it. A small income tax deduction for a 2.5% fee on after tax investment that is subject to income tax is not appealing when the alternative is a no fee investment that is subject to capital gains tax. I think too many overlook the impact of income vs capital gains tax on the earnings. That doesn't even consider the GVUL investment performance relative to its mutual fund or ETF counterpart.
If you are investing purely for stable yield, the baseline of 4% interest with a 1.5% guarantee falls well below the 5% money market rates currently available. Even with the income tax savings, you end up ahead on the outside.
DYODD, YMMV