There are only two reasons I can see which Life Insurance would not be a good place to "save" your money. First, if you are not looking for Life Insurance, Second, if you don't have time to let your money grow.
The primary focus of life insurance is to do what, provide a death benefit upon your death (or the covered persons death). If you do not need or rather not looking for Life Insurance, you can find other better ways to save your money, like in mutual funds for example. Second, there are administrative costs to owning your life insurance which are paid for first, before any interest is applied to any excess money. Over time, and if you are funding the policy like it should be, then your cash growth can be tremendous due to tax deferral & compounding growth.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A great deal of money has been saved in life insurance plans. The chief reason is that life insurance premiums look like a bill and that forces a person to save. Rate of return is not the issue, rather it is transfering money from current needs to future needs. No other investment is self-completing. If the insured dies the entire $1M is given to his beneficiary, even if he has only paid a single month's premium. Every other investment triggers taxes where life insurance proceeds pass income tax free. It is an extremely flexible savings program with tax advantages and it is self-completing. That is an excellent savings plan for many people.
Manager, Marindependent Insurance Services LLC, California
Thank you for the question.
Life Insurance is generally not a good saving plan for multiple reasons (some of them include):
Lots of Fees associated with them
Combined with an Insurance Product
Hard to compare plans (IE Company A vs Company B)
Pays large commissions to the Insurance Agents
As a real general rule of thumb a typical whole life insurance plan will not start to see any real value growth until you have owned it for about 15 to 20 years.
When shopping for whole life insurance, ask to see guaranteed value charts of the proposed life insurance policy. Watch how slowly it takes for the typical whole life policy to equalize what you put into the plan to what the cash value amount is.
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The primary focus of life insurance is to do what, provide a death benefit upon your death (or the covered persons death). If you do not need or rather not looking for Life Insurance, you can find other better ways to save your money, like in mutual funds for example. Second, there are administrative costs to owning your life insurance which are paid for first, before any interest is applied to any excess money. Over time, and if you are funding the policy like it should be, then your cash growth can be tremendous due to tax deferral & compounding growth.
Life Insurance is generally not a good saving plan for multiple reasons (some of them include):
Lots of Fees associated with them
Combined with an Insurance Product
Hard to compare plans (IE Company A vs Company B)
Pays large commissions to the Insurance Agents
As a real general rule of thumb a typical whole life insurance plan will not start to see any real value growth until you have owned it for about 15 to 20 years.
When shopping for whole life insurance, ask to see guaranteed value charts of the proposed life insurance policy. Watch how slowly it takes for the typical whole life policy to equalize what you put into the plan to what the cash value amount is.