Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Why is life insurance a superior form of savings compared to other savings? Well, superior is maybe not the right word to use. Life insurance offers some flexibility that other forms of savings may not have. First off, cash values are tax advantaged while growing. Access to funds can happen without tax penalty. Cash values can act as the 6 months emergency funds so many advisors reccomend. Then basically there's the life insurance side of things which nothing else offers.
Co-Founder, Coastal Financial Partners Group, California
Life insurance is important and unique among savings products because it protects families against financial loss from the death of a loved one with an income tax free death benefit.
For many families, a cash value life insurance policy is the largest long term savings asset they own. Retirement annuities are insurance contracts that turn savings into a guaranteed income for life. Thanks to these and other life insurance industry products, families and retirees can enjoy security and peace of mind.
One out of every five dollars (20%) of Americans’ long-term savings is in life insurance and annuities.
The tax treatment of life insurance and retirement annuities encourages people to prepare and plan for the future and thus relieves pressure on government programs.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
I think it is really, really important to evaluate a product based on this:
What is it supposed to do, and how well does it do it?
Rocket ships are great for getting you to other planets.
Hammers are ideal for driving in nails.
Annuities are perfect for drawing down a guaranteed income.
And life insurance is tailor-made for providing your heirs with the exact amount of money they will need, exactly when they will need it, in the most cost-effective way. You just cannot beat life insurance for this job.
Having said all this, the cash value of life insurance is a great added benefit. With a good product from a solid company, it would be hard to beat the guaranteed cash rate. It would also be hard to top the tax advantages with regards to accumulating and distributing the cash.
But it must be remembered that all these advantages are secondary to the main purpose of the product. So, you never want to buy the product - or manage the cash - only to shortchange your beneficiary.
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For many families, a cash value life insurance policy is the largest long term savings asset they own. Retirement annuities are insurance contracts that turn savings into a guaranteed income for life. Thanks to these and other life insurance industry products, families and retirees can enjoy security and peace of mind.
One out of every five dollars (20%) of Americans’ long-term savings is in life insurance and annuities.
The tax treatment of life insurance and retirement annuities encourages people to prepare and plan for the future and thus relieves pressure on government programs.
What is it supposed to do, and how well does it do it?
Rocket ships are great for getting you to other planets.
Hammers are ideal for driving in nails.
Annuities are perfect for drawing down a guaranteed income.
And life insurance is tailor-made for providing your heirs with the exact amount of money they will need, exactly when they will need it, in the most cost-effective way. You just cannot beat life insurance for this job.
Having said all this, the cash value of life insurance is a great added benefit. With a good product from a solid company, it would be hard to beat the guaranteed cash rate. It would also be hard to top the tax advantages with regards to accumulating and distributing the cash.
But it must be remembered that all these advantages are secondary to the main purpose of the product. So, you never want to buy the product - or manage the cash - only to shortchange your beneficiary.