Thursday, November 22, 2012

Beware of financial traps

A successful entrepreneur, who had made a lot of money, asked for my advice about a universal life policy that was recommended to him. He had to put in $1 million in savings to get $5 million of insurance protection for his family. I told him to send the benefit illustration for me to take a look but advised him to be cautious, as there is a trap waiting for him.

I recall a case, described in my book "Get Value from Your Life Insurance" where the customer was not aware about the trap in a universal life policy (see case #16 in my book). The book is available at

High income earners should also be aware of another trap in an investment-linked product that was designed to hide the high charges, until it became too late, causing the customer to lose $50,000.

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