Is Life Insurance an Investment Tool?

You may hear that life insurance is not a good investment, but many experts insist life insurance is a good investment.  So…which is it?

When life insurance is referred to as an investment, it is a permanent life insurance policy and is probably a whole life insurance policy.  Whole life, as opposed to term life insurance, doesn’t have an expiration and it does have a cash value portion.

The cash value creates the investment aspect.  When you pay your premium for a whole life insurance policy you are creating two benefits to yourself and your family.  Part of the payments go to the life insurance policy and part of the payments go to an interest earning investment that increases in value just like any other savings or long term investment you would make.

Whole life insurance is much more expensive than term insurance, because the policy lasts well into your retirement years (when it costs much more to insure you).  As an investment, insurance won’t bring the biggest return and it costs more to use, so why do so many still recommend it?  Because it is a safe investment that solves two problems: life insurance and investing for later years.

Is it worth it for you?  if you are someone who never seems to get around to investing the money or loses the money in poor investment decisions, then a whole life insurance policy might be the right investment vehicle for you.  You don’t pay taxes on it until you withdraw from it so it acts as other investment vehicles.    If, on the other hand, you prefer putting the money into a 401(k) or IRA, and you will actually do that, go for it.  The important thing is to set the money aside so you can retire comfortably, regardless of which investment vehicle you choose.  Need Help?  Come see us at InsuranceInvestmentPro.com