Whole Life Insurance-Insurance And Investment Components Together

| November 20, 2013
Universal Life Insurance Company

Universal Life Insurance Company (Photo credit: Thomas Hawk)

The question on many people’s minds is whether whole life insurance is a good investment including its many surrounding benefits and pitfalls. The reason is because the stock market and mutual funds have continued to hurt many investors and the guarantees and safety whole life insurance promises is highly being questioned.

For many who have been servicing their whole life insurance for decades, the reason many buy it is due to the insistence of a relative, friend or a close business comrade but very few understand it fully to make their own mind about it. However, as years forge on and these individuals continue doing as they were told to invest in mutual funds and stocks, the result has been one to smile about. Decades or years later, as many sit down with their financial advisors they realize the whole life insurance policy is the best type of investment component they have ever invested in. It does not lose funds, outperforming such investments as the 401k or IRA. A policy you might have reluctantly decided to buy from a stranger, friend or relative could in turn be the smartest investment decision you have ever made on matters to do with finance.

While many who have been investing in whole life insurance believe it is the best ever investment, others seem to have dissenting or unsatisfactory views. One thing financial advisors need to indicate is that those who are into the whole life insurance struggle at first to outperform investment at the beginning of servicing the policy. Most end up falling behind since this cover is life insurance and hardly an investment account, meaning cover providers handle it differently.

As years go on, the whole life insurance benefits will start to be seen and seemingly, good things about this cover always come to those who are patient since it needs some time if its effects are to be seen. Some companies offering the cover use what is known as a high cash value type of cover to speed it up including the entire life insurance policy growth. Other insurance companies might approach it differently and it is important to understand how they individually deal with impatient clients.

Whole life insurance is being used as an investment by many in so many ways. Essentially, companies offering whole life insurance are divided into mutual and stock. Stock companies are made up of stock-holders who follow the model of huge corporations where the profits are channeled to the shareholders, meaning incoming profits reward shareholders. For a mutual company, there are no shareholders. The policy owner will act the part of the shareholder and dividend from the profit of the company will come to him or her.

It is contrasted with bank deposit, where the deposit offers the chance to a shareholder to enjoy some of the company profits. In fact, those who are looking for ways to make the most of whole life insurance mostly as an investment component avoid stock companies. Seemingly, mutual companies offer the best value to any policy owner and perhaps the first place to stop while in search of this type of cover although cover providers differ.

Author Bio

Former architect Terry Johnson now writes commercial as well as creative articles. He holds an experience of over five years now in writing articles for Memphis Insurance.


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Category: Insurance

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