Investing And Life Insurance: Facts You Should Know

Readers Question:

What are the merits of putting my money on a whole life insurance plan as compared to investing it in mutual funds?

Imelda

Cincinnati, OH

Excellent question! For those who dont know; Whole life insurance is a permanent type of life insurance that is meant to be kept for as long as the insured is alive (and the policy is being paid). Among the merits of a whole life insurance plan includes that you wont usually get with mutual funds or any other types of investment vehicle:

Youre premiums are fixed from the time you purchased your policy; until well into youre golden years which can save you a lot of money since life insurance coverage is very expensive as you get older.

Your policy builds up on cash-value, coming from a portion of your premiums plus interest from the carrier, which can accumulate into a lot of money in the long-run. This can be used to sustain your policy; you can loan against it, or sell the policy for annuity.

Similar to mutual funds, your policys cash-value is invested diversely, but guarantees you a fixed interest rate regardless of how the investments have performed.

Whatever income your policys cash value earns is tax-deferred as long as it stays within your policy.

Whole life insurance is a very sophisticated kind of coverage, so one would really need to understand how this kind of life insurance policy works before you purchase it. This can be used as an alternative form of investment for those who are less tolerant to risk and volatility represented by the equity market.

However, do keep in mind that the main purpose of any a Whole life insurance, just like any form of policy, is to give your beneficiaries financial security in case you suddenly pass away. So you only get to enjoy the benefits of this when youre already really old, or when you sell it. Its highly recommended that you shop for the best Ohio life insurance policy on the Web to get the latest rates and effectively compare your options.