Is Whole Life Insurance A Good Long Term Savings?
Posted February 1, 2010 – 4:33 pm in: term life insurancethe first 3 year i am going to add paid additions (PUI) 2 times the amount of the Premium
Tags: Good, Insurance, Life, Long, Savings, Term, Whole
6 Comments
If you’re looking to put money into a life insurance policy, I would recommend the Index Universal Life instead of Whole Life. Our IUL pays a minimum of 3.1% and maximum of 14.1%. The interest accumulation on Index Universal Life is based upon S&P 500 indices’ performance. Our average for the last 5 years has been 7.5%. When you consider what the stock market has done over the last few years, that’s a pretty good return.
What’s also good about IUL is you only participate in the gains, not the losses. So when the stock market goes up, so does the interest rate in your IUL policy. When the the stock market goes down, your gains are still in tact. You just don’t gain anymore until the market goes back up again.
Another good thing about IUL is you can borrow or withdraw from the policy without paying taxes, with no time frame of paying the money back.
There should be a balance in your investment portfolio. If you have a 401K that the company pays for and they have a match policy, I would recommend putting in no more than the match. Always take free money. Keep in mind that your 401K not only belongs to you, it also belongs to Uncle Sam and he wants his money too. Be prepared for penalties if withdrawn too early, and for the 30%-40% our good ole Uncle Sam gets when you retire.
I would also purchase an IUL insurance policy because it’s tax-free supplemental retirement money that Uncle Sam cannot get his hands on. In addition to that, you have a permanent policy that will never lapse, as long as you continue your premium payments.
It’s crucial to have a permanent policy because life can throw a curve ball at you with some kind of sickness or disease that could render you uninsurable. Having a permanent policy prohibits any insurance company from cancelling you regardless of what kind of uninsurable ailment you may contract. If you were stuck with a term, eventually when that term period runs out, it’s bye-bye to you from the insurance company.
I’m California licensed for 10 years.
mob442ins@yahoo.com
It’s very competitive with the rate of return that your mattress pays. The mattress will excel over a 10 year period (because the insurance will yield a negative return) and the insurance pulls ahead by year 20 (barely). The mattress also reaps the same tax benefits since the money you withdraw from the mattress has also not been taxed.
The mattress however doesn’t pay a death benefit greater than what you put in it and for that reason alone the insurance excels. So, if you’re looking for insurance then the policy might fit your need, but if you’re looking for a savings vehicle then you’re looking at something that’s no better than your mattress.
Identify the goal and then identify the product to use.
Whole life is HORRIBLE long term savings. If you pay in $1,000 a year, $100 of that goes to “savings”.
If you die, the insurance company keeps your “savings”. If you want to take your “savings” out, you pay the insurance company interest, to take your “savings” out and use it. If you die without paying your “savings” and the interest, back to the insurance company, they subtract that from the death payout.
Effectively, you lose at least 90% of the money you put into “savings”.
How does this EVER make any sense? It doesn’t.
Life insurance is a DEATH tool, not a savings tool.
No. Its not. If you want a real investment see someone who sells investments like IRA’s and 401K’s and other investment savings.
Life insurance is NOT an investment.
It is not savings except the Tx Benefit you get. It is life cover which you get on death.
No. Whole life insurance is rarely a good investment.