3 ms·
And already something exposed to the insurance world via Whole Life policies - which are technically life insurance, but with an investment vehicle baked in. Wh
by sethhochberg 4y ago
And already something exposed to the insurance world via Whole Life policies - which are technically life insurance, but with an investment vehicle baked in. Whole life policies are typically a lot more expensive than term life, but a portion of premiums paid goes into cash value which can be invested in markets, and often tax-free.
If you die early, your beneficiaries get a bigger payout than you paid in. If you live until the end of the whole life term, you've accumulated cash value and investment income on top of it.
The "catch" is really just the expense of the premiums. Whole life is out of reach of many people shopping for life insurance, especially those looking for coverage because their financial lives are already pretty close to the edge with debts, etc.
- staticman2 4y agoThe "Catch" with whole life is the expected returns are lower than term life coupled with clean, insurance free investment. You also have a entire industry of sales people spreading misinformation about how the policies work: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/ https://www.whitecoatinvestor.com/debunking-the-myths-of-who...
- Bostonian 4y agoArguably whole life (WL) policies should be compared with buying a term policy and investing the difference in bonds, since WL policies are relatively safe. Then WL policies are competitive because of the tax benefits. WL policies will lag (term + stocks), but the latter strategy is more risky.