[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.easyquotes4you.com\/life-insurance-as-an-investment\/#BlogPosting","mainEntityOfPage":"https:\/\/www.easyquotes4you.com\/life-insurance-as-an-investment\/","headline":"Is Using Life Insurance as an Investment Smart?","name":"Is Using Life Insurance as an Investment Smart?","description":"Quick Navigation Links Show 1 Advantages of using Permanent Life Insurance as an Investment 2 Using Permanent Life Insurance as an Investment Cons 3 My thoughts 4 Frequently Asked Questions 5 Is life insurance a good investment? 6 What are the cons of using life insurance as an investment? 7 What are the pros of.. More<\/a>","datePublished":"2018-10-03","dateModified":"2020-02-20","author":{"@type":"Person","@id":"https:\/\/www.easyquotes4you.com\/author\/site-admin\/#Person","name":"Rob Pinner","url":"https:\/\/www.easyquotes4you.com\/author\/site-admin\/","identifier":1,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/e4da538e10e071b419f4843e8193941a0ff5ad58e937daa177fa846a5124dc4d?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/e4da538e10e071b419f4843e8193941a0ff5ad58e937daa177fa846a5124dc4d?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Rob Pinner","logo":{"@type":"ImageObject","@id":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/logo-shape-e1536791917640.png","url":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/logo-shape-e1536791917640.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/10\/life-insurance-good-investment-1.jpg","url":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/10\/life-insurance-good-investment-1.jpg","height":1104,"width":1200},"url":"https:\/\/www.easyquotes4you.com\/life-insurance-as-an-investment\/","about":["Life Insurance","Indexed Universal Life"],"wordCount":900,"keywords":["buy online","buying life insurance with diabetes","experienced agent","financial portfolio","independent agency","independent agent","indexed universal","indexed universal life","indexed universal life policy","insurance","insurance policy","investment","investment vehicle","life agent","life insurance","permanent life insurance policy","universal life","variable universal life","whole life"],"articleBody":" Quick Navigation Links Show 1 Advantages of using Permanent Life Insurance as an Investment 2 Using Permanent Life Insurance as an Investment Cons 3 My thoughts 4 Frequently Asked Questions 5 Is life insurance a good investment? 6 What are the cons of using life insurance as an investment? 7 What are the pros of using life insurance as an investment? If anyone has ever talked with you about using\u00a0 life insurance as an investment, you have probably heard the saying \u201cbuy term and invest the difference\u201d.\u00a0 This saying is based on the premise of buying low cost term life insurance which frees up money for investments.Permanent life insurance, life insurance that has a cash value component, is also recommended when talking about using life insurance as an investment.Life Insurance agents and financial advisors agree that life insurance is a key component to your financial portfolio, but when talking about using life insurance as an investment vehicle, they couldn\u2019t disagree more.\u00a0 We are going to talk about the pros and cons of using a life insurance policy as an investment.\u00a0 At the end we will give our thoughts on whether it is a good investment or not.Advantages of using Permanent Life Insurance as an InvestmentTax Deferred Growth on Investment: The cash value component of a permanent Life Insurance policy grows tax deferred during the life of the policy. That means no taxes on interest, capital gains, or dividends.Tax-Free Withdrawals\/Loans- While these policies grow tax deferred, you can also withdraw and take out loans tax free as long as the policy remains in-force. You can use the money for a down payment on a new house, children\u2019s college education, or to help supplement your retirement.Life Insurance Doesn\u2019t Expire- If you pay the required premiums you will have the death protection for life. The coverage does not expire like with a term life policy.Provide Critical & Terminal Illness Benefits- Some insurance carriers now offer critical and terminal illness riders on there permanent life insurance policies at no extra cost. These riders allow you to access a portion of the death benefit early if you are critically ill or terminally ill.\u00a0 These riders can also be activated if you have to use a nursing home or home health care services.Using Permanent Life Insurance as an Investment ConsSurrender Charges: Most if not all insurance carrier\u2019s permanent life insurance policies come with a surrender period on the cash value component. This can be a problem if an emergency arises and you need access to your funds, you could have to pay a penalty to access your funds. The surrender period usually last 15-20 years depending on the carrier.Management Fees- The cash value component on all permanent life insurance policies have management fees which can be higher than a regular investment. Also, the COI (Cost of Insurance) increases each year which could also have a negative impact on your earnings.Tax-Implications- Although these policies due grow tax deferred and can be withdrawn tax free, be wary, there is a hidden danger. If these policies lapse while you are withdrawing or taking out loans, then you could be on the hook for income tax if there is a gain in the policy, which if funded properly there will be a gain.Death Benefits Decrease- While true that you will have the coverage for as long as you pay premiums, if you are withdrawing or taking out loans, this can have a negative impact on the death benefit. The death benefit decreases each time you pull money out of the cash value.\u00a0 It is equivalent to what you withdraw but can accrue interest which will cause the death benefit to decrease more.My thoughtsWhile some of the disadvantages of using life insurance as an investment are valid points, with the guidance of an experienced agent I believe Life Insurance can be used as productive investment vehicle.\u00a0 I would recommend using an Indexed Universal Life policy.The key to using a life insurance as an investment is to treat it like an investment.\u00a0 If you put the bare minimum premium into an Indexed Universal Life policy, then you will get minimum return and basically all you have is a permanent life insurance policy.It is important to fund these types of policies to the max to get the full benefits that are allowed under the insurance umbrella.\u00a0 Properly funded, permanent life insurance policies can be another tax-free retirement plan in your financial portfolio.It is always recommended to team up with an experienced agent that is knowledgeable before buying life insurance as an investment.\u00a0 If you have any comments or questions, please give us a call.Frequently Asked Questions\t\t\t\t\t\t\t\t\tIs life insurance a good investment?\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tUsing life insurance as an investment can be a powerful tool when looking to supplement your retirement. Withdrawals are can be taken out tax free while having a death benefit to protect your loved ones.\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tWhat are the cons of using life insurance as an investment?\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tThe cons of using life insurance as an investment are:-Surrender Charges-Management Fees-Tax Implications if the policy lapses-Death benefit decreases when withdrawals are taken\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tWhat are the pros of using life insurance as an investment?\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tThe pros of using life insurance as an investment are:-Tax deferred growth-Tax free withdrawals-No contribution limits-Long term care coverage with most policies-No legislation \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t{\t\t\"@context\": \"https:\/\/schema.org\",\t\t\"@type\": \"FAQPage\",\t\t\"mainEntity\": [\t\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"Is life insurance a good investment?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"Using life insurance as an investment can be a powerful tool when looking to supplement your retirement. Withdrawals are can be taken out tax free while having a death benefit to protect your loved ones.\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t,\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"What are the cons of using life insurance as an investment?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"The cons of using life insurance as an investment are:-Surrender Charges-Management Fees-Tax Implications if the policy lapses-Death benefit decreases when withdrawals are taken\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t,\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"What are the pros of using life insurance as an investment?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"The pros of using life insurance as an investment are:-Tax deferred growth-Tax free withdrawals-No contribution limits-Long term care coverage with most policies-No legislation\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t\t\t\t]\t}"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Is Using Life Insurance as an Investment Smart?","item":"https:\/\/www.easyquotes4you.com\/life-insurance-as-an-investment\/#breadcrumbitem"}]}]