Why Is Whole Life Insurance A Bad Investment?

  1. 1492 POINTS
    Jeff Davis
    Insurance Advisor, Lordship Insurance Services, California
    Lets begin by defining what is an investment? In the broadest sense of the word, an investment is when you place money or time into something in expectation of a return on that investment. To that end whole life insurance can serve the purpose of being an investment in that money is invested into it for an expected end. There are a lot of factors that can make an investment bad such as it loses money, it has a low rate of return or it offers no return at all. What makes an investment good or bad is to know what you expect it to return to you. If you want an insurance policy that offers a guaranteed death benefit and has cash value, then a whole life policy may work for you. Define what you want first and then find the vehicle that takes you where you want to go.
    Answered on October 22, 2013
    flag this answer
  2. 11783 POINTS
    Contact Me
    Larry GilmorePRO
    Agent Owner, Gilmore Insurance Services, Marysville, Washington State
    Why is whole life a bad investment? Well, it could be the people that tell you that whole life is a bad investment don't sell whole life and want you to purchase what they have for you to buy. Or quite often whole life is compared to term with a equity (stock) fund. The problem with this as an accurate comparison is that it doesn't take risk into account. Whole life is a dull boring consistent product that does what it says it will over time. A stock market equity (mutual fund or whatever) is a different sort of risk. It can rise and fall and even disappear. While whole life policies tend to be invested in more secure long term investments which because they're safe and long term, provide a lower, but consistent rate of return. And the nice thing about Whole life is the cash values can't go backwards.
    Answered on October 9, 2015
    +0
    1 Thumb up 0
    +1 this answer
    flag this answer
    3. Did you find these answers helpful?
    Yes
    No
    Go!

Add Your Answer To This Question

You must be logged in to add your answer.


<< Previous Question
Questions Home
Next Question >>