Is Life Insurance An Investment?
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63333 POINTSview profilePeggy MaceMost of the U.S.Life insurance is, at its core, protection against loss. Term life insurance is "pure" protection, as it has no cash value. Permanent insurance combines pure protection with accumulation of cash value. Whole and Universal Life policies usually do not exceed a certain amount of cash value so that they keep their tax favored status. If they are overfunded, or if Indexed or Variable products are used, the policy may become a modified endowment contract and gains are subject to income tax. Some people call that type of policy an investment.Answered on July 25, 2013flag this answer- 63333 POINTSview profilePeggy MaceMost of the U.S.Permanent life insurance accumulates cash values that can be used while the policy holder is still alive, in addition to providing a death benefit to the beneficiary noted on the policy when the insured person passes. Because the policy performs both functions, it is hard to compare to investments that do not also provide death benefit protection.Answered on August 31, 2013flag this answer
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