Question for investors

csuave

For those of you that are managing your investment and retirement, what do you think of life insurance?  DH and I are considering adding investment types of policies because we can use them as a tax free option for our money and of course have the insurance benefit if needed.  We make too much for the Roth IRA so our advisor highlighted being able to take money out of life insurance tax free or leave it as a non taxed inheritance for someone.  Has anyone else looked into this?  What do you think the pros and cons are?

ETA: We are and intend to remain child free.

emmyg65

We just bought life insurance and declined this option because it didn't make sense for us right now. We didn't want to pay the higher premiums and didn't see the investment option as a benefit (we have different investment vehicles that have higher rates of return and fewer associated expenses). 

Here's a good article that outlines some of the issues and has some calculations you can do to see if it's right for you.

pinkcow13

I work for a life insurance company, and I think it is a very good idea to have a life insurance policy. As your advisor indicated, you can take out money that you accrue tax free. There are different options besides just a whole life policy, you can look into variable policies that offer investment divisions, or universal life policies with flexible premiums.

They also help with any sort of unforeseen circumstance. If god forbid one of you becomes ill, depending on the type of policy you get or if it comes with any type of riders, you can take money against the death benefit. Also, worst case scenario, if one of you (god forbid) dies, the death benefit can help the other with funeral expenses, bills, and a sense of security. 

Sorry if I sound like a sales person (I'm not!), but I think a life insurance policy is a good thing to have as part of an investment portfolio. It does not have to be a major one, but just enough to be able to provide security for your beneficiary. I myself have 2 policies. One is my employee policy, and the other one a second one that I took out through my company that I can keep in case I ever leave the company. My personal policy does not have a very high death benefit. My goal is to keep it and hopefully my beneficiary will not have to use it. If we have a kid, I am planning on then using it for college expenses, or maybe I will transfer it to him/her.

csuave

Thanks for the replies!  The article offered some good points.  @pinkcow13 when our advisor was going over the policy I liked the option to take money out in advance for a terminal illness.  There is a lot to think about.

thisismynickname2

No offense meant to the professionals, but I tend to listen to my dad on these things because he's been through all of this stuff and has my best interests at heart. That being said, he advised us to get "term" life insurance as it has what you'll need, and not other bells-and-whistles that you may not need or get benefit from. Similarly, he said to avoid depending on employer-provided insurance because the moment you stop working for that employer, you no longer have it.