Thursday, January 21, 2016

Life Insurance FUNdamentals

Over at Forbes, Tim Maurer has a very interesting and helpful compendium of useful life insurance information and principles.

One, however, stands out:

5. Life insurance is a risk management tool, not an investment.

This cannot be stressed enough.

Recently, I received email from a carrier touting its newest Indexed Universal Life product, hailing it as "Using Life Insurance for Your Client’s Smart Money."

Basically, the company recommended using its quasi-investment-based life insurance policy as a single-premium "one-and-done" policy; that is, no more premiums would (probably) ever be due. The idea is that the policy's cash value would grow quickly  based on the stock market. There are a lot of problems with this strategy, but the primary one is that, as Mr Maurer notes, there are plenty of other, more effective investment vehicles available.

Good info, good advice.
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