April 3, 2023

Whole Life Insurance, A Whole New Asset Class

Chris Lubell

Recent changes in the financial markets and the erratic performance that followed have given an old workhorse a fresh appeal. A strong case can be made for the usage of whole life insurance for investors wishing to diversify their investment portfolio and for a more tax-efficient fixed income investment alternative.

Why is whole life insurance a wise financial decision?

  • Participating Whole Life is now regarded as a new asset class primarily due to its tax-advantaged continuous growth and large estate benefits.
  • The cash and dividend value of a Whole Life policy cannot decrease as long as premium payments are paid, unlike other accumulation policies like most Universal Life policies, mutual funds, and other equity investments.

Who should think about Whole Life Insurance as a possible investment option?

  • anyone who wants their investing portfolio to generate steady profits.
  • The usage of Whole Life in the corporation not only offers the same consistent, tax-deferred returns but also presents options for Capital Dividend Account planning for people who have businesses and are building up surplus.

Whole Life Insurance: What Is It?

  • It is perpetual life insurance, so it won't run out before you do!
  • For the duration of the policy, level guaranteed premiums are included. (Shorter premium payment terms are frequently offered.
  • Its cash value growth is tax-favored.
  • If you participate your entire life, it may give annual dividends. There are several ways to receive dividends, but "paid-up additions" is the choice made most frequently to offer the most tax-advantaged growth.
  • The participating pool's assets are expertly managed and primarily comprise fixed-income investments. The funds have very little volatility and very low management fees (some as low as 0.07% management fee).
    This portion of the dividend account that isn't guaranteed and the guaranteed cash value grow tax-deferred together. It is given to the beneficiary tax-free upon death.

Can I use the policy's cash value?

The insured person's lifespan allows access to the cash values through partial or full surrender, policy loans, or other means.

Withdrawals may be subject to income tax. However, using the insurance policy as collateral and borrowing money from a third-party lender is another way to avoid paying income tax. Additionally, if the loan is correctly set up, the interest paid on it may be tax deductible.
compared well to a long-term high yield bond.

Today, the majority of portfolio managers advise a sensible investor to maintain a diversified portfolio with a sizable share in fixed-income instruments like bonds, term deposits, etc.

For balanced growth, many investment advisors advise investing between one-third and 40% of a portfolio in these kinds of securities.

Participating throughout life can have a big impact on your portfolio's performance and lower volatility in general.

It is worthwhile to look at Participating Whole Life because it can produce big returns whether you invest as an individual or as a business.

If you believe you could benefit from this approach, get in touch with me. As always, feel free to forward this post to anybody you believe would be interested.

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