Cash values life insurance can be a savings or investment policy depending upon which crediting method is used and how the policy is designed. There are three “saving” life insurance policies: Participating whole life insurance, current assumption universal life insurance and indexed universal life insurance. There is one “investment” life insurance policy that uses a crediting method of separate sub accounts with equity and bond allocations: Variable universal life.
The performance of a life insurance policy as a savings or investment policy may depend on the policy design. That design must use the lowest cost of insurance death benefit option that complies with the TAMRA regulations to contain the policy expense. If designed correctly, life insurance can be a great savings or investment policy that can generate tax free retirement income as long as the policy is kept in force for the life of the insured.
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The performance of a life insurance policy as a savings or investment policy may depend on the policy design. That design must use the lowest cost of insurance death benefit option that complies with the TAMRA regulations to contain the policy expense. If designed correctly, life insurance can be a great savings or investment policy that can generate tax free retirement income as long as the policy is kept in force for the life of the insured.