Benefits of Using Life Insurance as an Investment

Many people use life insurance as a way to pay for their funerals and to pay off debts but they are not aware of the many benefits of using whole life insurance as an investment. With the current state of the economy and the collapse of Wall Street more people are looking for ways to keep their money safe.

Whole life insurance is one of the safest ways to keep your money safe. Whole life insurance is permanent insurance that will provide life insurance coverage throughout a person’s life. The premiums and death benefit of a whole life insurance policy remain fixed throughout the life of the policy. A portion of the premium is paid into a savings account and builds cash value. The insurance companies usually guarantee a minimum rate of return on the cash value portion of the insurance policy. In addition, most life insurance companies pay dividends toward the cash value portion of a policy. The dividends are considered rebates of insurance premiums according to the IRS and are not taxable. The only instance where dividends would become taxable is if the dividend amount exceeds the total amount the policy holder paid in premiums for the life of the policy. This instance is extremely rare. Dividends can also be used as “paid up additions” which provide additional paid whole life insurance policies in the amount of the dividends owed to the insurance policy owner. Cash value can be borrowed against when the policy accrues enough savings.

In closing, many people are looking towards purchasing Whole life insurance as an investment because it will keep their money safe along with the guaranteed rate of return that is offered. Many people do not want to speculate anymore in the stock market and instead want to preserve their wealth. Whole life insurance can help these people safely invest their money.