David Lerner Associates News

Life Insurance as an Investment

Core Facts

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Friday, September 9, 2022

There are many good reasons to purchase life insurance. One of them is as part of your investment strategy. You may not have regarded a life insurance policy as an investment vehicle, and while it should not replace other investments such as a 401(K) or an IRA, it can be a useful part of your financial plan.

A whole life insurance policy builds cash value over time and can be used to grow wealth, as well as provide benefits to your family. A portion of your premiums goes into your cash value account, and that money grows tax-deferred over time. This can only be done with whole life or permanent life policies.

Take your financial position and the possible needs of your family into account when considering life insurance as an investment. Here are some reasons including a life insurance policy as an investment would be a good idea:

  1. You don’t have access to an employer-sponsored retirement fund
  2. You already have a 401(K) or an IRA
  3. Your 401(K) and IRA contribution are maxed out.
  4. There is money available in your budget to pay for another investment

 

“Before you make the decision to include a life insurance policy as part of your financial plan, consult your financial advisor, your accountant, and an estate attorney,” says Michael Norton, Senior Vice President, Investments for David Lerner Associates.  “That way you’ll get the best possible advice to cover all your financial needs.”

 

Different Types of Cash Value Policies to Consider

 

Whole Life:  The monthly premiums are fixed, and the death benefit is guaranteed. The cash value grows slowly, typically from one to two percent. While the growth rate is slow compared to other investment types, you can grow a substantial sum over the long term.

Universal life insurance:  Indexed universal life insurance policies can tie the growth of your cash value to a stock index, such as the S&P 500. This could increase the rate of growth of your cash value. A variable universal life may offer several investment options for building cash value.

Life insurance is a necessary part of a sound financial plan.  You do need to provide for the inevitable and the unforeseen events in your future. And, if you already have a sizeable nest egg, a cash value policy can diversify your investment portfolio while providing you with the security of permanent life insurance.


IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

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