All Forum Posts by: Account Closed

I've had my life insurance license and I never sold a cash value insurance policy.  IMO it's a niche product like an annuity.  In certain, specific cases it MIGHT make sense.  Generally, cash value insurance is a trash product because the insurance agent doesn't sell it to the right person and the client doesn't understand exactly how to use it.  It's a high commission product.  That's why it gets pushed.  Ask the agent how much they are going to make off of you.  Then think about how much the insurance company needs to make off of you to cover overhead and cover this product. 

Here is where I found it makes sense to consider a cash value insurance policy.  Find a policy that has a decent return and is quality.  Agents can often over promise on this product.  Set the death benefit amount to what you need.  Borrow against it to fund property investments after you've built cash value.  An agent can run an illustration for you and tell you how much you should borrow.  It CAN be a decent place to store cash because it will give you a death benefit should something happen to you and better interest than a savings account.  I like the flexibility of being able to borrow against it.  I like that the interest rate is generally higher than the bank.

I don't like the fact that most policies keep your cash.  For example, if you die and you have a death benefit of 100k and have paid up to 60k.  They will give you the 100k and keep the 60k.  Generally, a better return on your 60k can be found in the marketplace.  This is why you hear the phrase, "Term insurance and invest the rest."  Advisor will show you what the cash value policy costs vs term life insurance.  Then they would show you market average return on if you invested the difference.  I've yet to see a cash value policy give a better return than the "Term and invest the rest" strategy.

In summary and IMO - cash value insurance isn't a bad place to store cash should the policy be quality.  Just understand that by putting your money in this product you're making the insurance company rich.  As soon as my previous financial advising firm started to direct us to sell it as an investment, I left.  I do not believe cash value insurance policies are a good investment or should be sold as an investment.  You can find much better returns in other places.

Let the games begin on shredding my opinion!  hahaha