Different types of Life Insurance allow you to gain a return off of your investment towards your untimely fate on this planet. Seems a little dark to be able to gain tax free benefits while trying to gauge when you are going to kick the bucket. However, if you are going to have to leave this planet; Then you might as well make some cold hard cash. Let us look at two of the better investments you can make towards life insurance and a positive return.
A lot of people opt for a no exam life insurance policy but for those looking for a policy that allows for a monetary return, whole life and indexed universal life insurance are two life insurance policies that allow for return for the money that you put into your policy. This type of insurance allows for borrowing on the cash invested for such things as retirement or education without paying taxes. Both of these are known as permanent and cash-value insurance policies because both allow to build cash as well as provide benefit to the insured’s beneficiaries.
Each are a little different in their approach and returns while the choice of either policy is based on how aggressive or somewhat structured you want your investments to be in your policy. One thing to consider is cash value policies such as these can come with pretty heavy fees that really can really drag down your returns.
Whole Life Insurance
Whole life provides the insured with a decent growth based on interests and dividends that are tax free. The person being insured is guaranteed to be able to cash out when they die and as well as the ability to borrow on it when alive. It also can be cashed out for a portion of the investment before dying but is usually defined by the lender on how much is actually given back.
Indexed Universal Health Insurance
Indexed Universal Insurance is geared more towards being a tax free investment and keeps you safe if the market decides to take a plunge. Funds can be borrowed from the policy without taking from the principle investment and allows for options to buy assets at an agreed upon price on or before a set date. Having these options shields the holder from losing badly if the market plunges but does cap earnings as well.
Confused on Whole and Indexed Universal Policies?
When considering whole vs. indexed universal life insurance, you need to know the following: The whole life universal insurance has fixed premiums and death benefits while the indexed universal life insurance has flexible premiums and adjustable benefits. The interest rates for both are fixed or variable while the whole life’s rates are decided upon by the policy and the index is by the insured. The cash value of whole life has a guarantee of around 3-4 % of assumed interest and the index grows with link to markets with a cap at around 13-14% and a hard floor of 0%.
Is Either Policy Better Than the Other
When looking at either policy it really depends on how flexible you want your policy to be, how much money you are spending, and how well the stock market does during your policy. With the stock market being out of your control; Then it can come down to how guaranteed do you want your cash to be in the end. The whole life provides for a fixed interest rate for a safe investment. However, the index allows for maximum accumulation up to 13-14% depending on the health of the market with basically no risk in losing big. On picking either policy it might seem that it depends on if you like to gamble a little or play it safe.