Hello!
Someone is trying to sell me a life insurance policy (the expensive one where premiums become an investment) and I am really not sure if it is worth it. On one hand, I would like to invest, on the other hand I want some flexibility and don’t want to rid myself of pleasure using my money or paying a debt that has 9% running on it. Is there a website you would recommend where I could educate myself? The policy would be from NY life.
Thanks!
Life insurance and investments are both good, but they work best separately. For most people, there’s no benefit to combining them. If you don’t fully understand both what you’re buying and why it’s better than other options, don’t buy it. (Hint: In most cases, it’s not better than other choices.)
If you need life insurance, estimate the amount and choose a Term life policy that covers it. If you want to invest, look into index funds or beginner investing resources with a no-fee brokerage. And if you don’t need life insurance, don’t buy it!
Using insurance with an investment is a great way to protect your money from taxes. Investments within an insurance policy offer one of the best tax advantages for growing your money, though there may be higher fees. It’s an excellent tool for preserving assets, but it should be part of a broader financial plan, not just a standalone option.
I would only recommend cash value life insurance if you have already maxed out contributions to other tax-deferred investments like an IRA or 401(k) and if you need life insurance because others depend on your financial support.
Ask for a 5-pay, make it the fixed income portion of your portfolio. Aim to have around 5 - 10 years of living expenses by retirement age. It’s practically a compounding tax free long term corporate bond based returns, much better than swapping taxable CDs and Treasuries throughout lifetime like what many people end up doing.