Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
If a life insurance policy is designed for cash value accumulation, it can be a good savings or investment depending upon the crediting method of the policy: dividends with participating whole life, interest rates with current assumption universal life,indices with indexed universal life and separate sub accounts with variable universal life.
The design of the policy must minimize the death benefit and comply with TAMRA to maintain the non modified endowment status of the contract. The accounts accumulated tax deferred and if the policy is kept in force for the life of the policy insured, withdrawals of basis and policy loans of gain can potential generate tax free income.
Excellent question. Life insurance can be a great investment if it is used properly. Insurance, unlike stocks, has a guaranteed value. There are even some that will increase with inflation or as the stock market increases.
It is very important to consider your current situation and determine if life insurance is the best investment for you. A financial advisor can help you look at all of your options.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
For a single premium a life insurance company will give your beneficiary thousands of times as much money. That seems to me to be a good investment. The discussion of the value of insurance as an investment comes from the fact that cash value life insurance has deferred taxation. That feature can be beneficial but under few circumstances will the total investment in a whole life policy equal the face amount or death benefit. It is quite frequent that your beneficiary will receive much more than the sum of your deposits.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
You know, and maybe it is just a difference in interpretation, but I have never looked upon Life Insurance as an investment vehicle. Life insurance is designed to provide financial protection for you in the event that you die early. It is a legacy of love that you can leave for your family.
That having been said, permanent forms of Life Insurance do provide some level or type of cash accumulation that grows over the years and is not taxable so long as the proceeds stay in the policy. That along with other investment vehicles can provide a nioce growing nest egg while the real benefit of the Life Insurance is to protect that .
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Is life insurance a good investment? Well, it depends on if it fits your risk profile. I consider whole life insurance to be a part of my investment plan as whole life insurance offers a safe rate of return, can't go backwards in a down market and protects my family if I die before retirement. My whole life actually protects in retirement as when I die. That said, you will find whole life is absolutely the most boring financial product ever. Simply it does what it says it's going to do, with no surprises along the way. Other investments shoot up, shoot down, stay flat and even fail. All which makes for great conversations over a beer. Life insurance? Well, very few people brag about steady.
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The design of the policy must minimize the death benefit and comply with TAMRA to maintain the non modified endowment status of the contract. The accounts accumulated tax deferred and if the policy is kept in force for the life of the policy insured, withdrawals of basis and policy loans of gain can potential generate tax free income.
It is very important to consider your current situation and determine if life insurance is the best investment for you. A financial advisor can help you look at all of your options.
That having been said, permanent forms of Life Insurance do provide some level or type of cash accumulation that grows over the years and is not taxable so long as the proceeds stay in the policy. That along with other investment vehicles can provide a nioce growing nest egg while the real benefit of the Life Insurance is to protect that .