How Can Life Insurance Work As An Investment in Florida?
Life insurance policies are not investments, but some of them, like whole life insurance and universal life insurance, have an investment component that allows you to build a tax-deferred wealth. Hence, life insurance policies can be seen as an investment because of their tax-free benefits. Another way life insurance works as an investment is in retirement planning. This involves depositing money in your cash-value account and growing it tax-deferred until you can use it during your retirement years - typically loaning it to yourself, which helps again with taxation (speak with a tax-professional for details).
NOTE: Term life insurance does not have an investment component.
Is Life Insurance an Investment Vehicle?
Generally, life insurance should not be used as an investment tool, but there are several similarities between life insurance and savings accounts. For instance, some life insurance policies have a cash value component. This cash value is an investment account that allows you to build cash over time, and you can borrow against it while you are still alive. The cash value you accumulate on this insurance policy is usually tax-deferred. In addition, some life insurance policies accumulate interests and pay dividends over time like savings accounts.
Is Life Insurance A Good Investment?
Permanent life insurance is a good investment because it has a cash value you can use to build cash. Also, the tax benefits that come with it make it a good investment tool.
Always discuss your life insurance needs with a knowledgeable Florida-licensed life insurance agent that works with multiple insurers. They will help analyze your specific needs and recommend the best life insurance options to meet them. Use the life insurance policy comparison worksheet to help choosing the right coverage to fit your needs.
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