variable annuity life insurance

I got talked into a VALI plan a while ago. I pay the minimum I can--$135/month--and I'm trying to find out if I should dump it or not. I set out to get straight term life insurance since I have two kids, ages 2 and 3, but talked into a retirement account also. If I stop now, I lose everything I've contributed to date, so I'm hesitant to do that, although I understand it's better to stop now and lose a few thousand than to keep paying this forever. I'm 35, single, have a wonderful retirement plan through work (they pay 25% of my salary into a fully-vested account for me without my needing to contribute anything), and was looking for $500,000 in life insurance for the kids. I don't plan on carrying life insurance after the kids are post-college age, so I'm not sure if I can even drop this plan down at that point. What's the deal with these plans and why can't I seem to grasp the pros and cons of them? They seem very complicated to me and I don't understand the benefit of paying into it for the next 30 years.

Thanks in advance, S.

Unfortunately, it appears that you were diverted from your original goal, by a "policy peddler", rather than a Life Insurance Professional. You do not mention how old the contract is, nor just how many payments you have made. It is VERY true that a VALI has rather high ongoing costs involved, and if the contract is less than 2 or 3 years old, you WILL lose most or ALL of the contributions that you have made.

On possible option (if available) that you might wish to look into, is to DECREASE the Death Benefit to a nominal amount, (say $25,000), having past premiums (over & above the actual COST of INSURANCE since the contract was issued) applied to the REDUCED contract.

I'm 35, single, have a

Generally speaking, once a contract has been "in-force" beyond a minimum period of time (to cover the commissions paid out), the Insured is permitted to REDUCE the Death Benefit, or if you so chose, to surrender the contract for it's "curren cash value".

What's the deal with these plans and why can't I seem

Unfortunately, you did purchase (were SOLD) a highly complicated contract. It involves a Death Benefit that is supported by a Cash Value Account. The cost of each months RISK(plus expenses) ) is deducted from that account monthly, and the balance is INVESTED in the mutual funds that YOU (or the seller(note that I did NOT refer to him as Life Insurance Agent) ) have pre-selected. Those Funds will go UP & DOWN based on the market. The potential BENEFIT of the contract is the ability to INVEST in the Market on an "Income Tax Deffered" basis, which may or may not be beneficial. The longer the contract is in effect, theoretically the more chance you have of GAIN.

Cal Lester CLU