{"id":1478,"date":"2020-07-28T17:03:44","date_gmt":"2020-07-28T17:03:44","guid":{"rendered":"https:\/\/www.gunderwealth.com\/?p=1478"},"modified":"2020-08-03T12:39:54","modified_gmt":"2020-08-03T12:39:54","slug":"invest-in-life-insurance","status":"publish","type":"post","link":"https:\/\/www.gunderwealth.com\/invest-in-life-insurance\/","title":{"rendered":"Should You Invest In Life Insurance?"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; admin_label=&#8221;Section&#8221; _builder_version=&#8221;3.22.3&#8243; da_disable_devices=&#8221;off|off|off&#8221; da_is_popup=&#8221;off&#8221; da_exit_intent=&#8221;off&#8221; da_has_close=&#8221;on&#8221; da_alt_close=&#8221;off&#8221; da_dark_close=&#8221;off&#8221; da_not_modal=&#8221;on&#8221; da_is_singular=&#8221;off&#8221; da_with_loader=&#8221;off&#8221; da_has_shadow=&#8221;on&#8221;][et_pb_row admin_label=&#8221;Row&#8221; _builder_version=&#8221;3.25&#8243;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/www.gunderwealth.com\/wp-content\/uploads\/2020\/07\/life-insurance.png&#8221; alt=&#8221;life insurance&#8221; title_text=&#8221;life insurance&#8221; force_fullwidth=&#8221;on&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|desktop&#8221; _builder_version=&#8221;4.5.1&#8243; max_height=&#8221;800px&#8221;][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;3.25&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.5.1&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221;]<\/p>\n<h4><strong>My answer to this: it depends.\u00a0 <\/strong><\/h4>\n<p><strong>If someone relies on you economically, then you need insurance.<\/strong>\u00a0 \u00a0But do you select a term or a permanent policy?<\/p>\n<p>When you hear advisors and agents suggesting that you \u201cinvest\u201d in life insurance, they are referring to the <strong>cash-value component<\/strong> available in permanent, also known as whole or universal life insurance.\u00a0 This concept does not apply to term life insurance, which can be thought of more like a rental versus something you own.<\/p>\n<h4><strong>Pros of permanent life insurance:<\/strong><\/h4>\n<ul>\n<li>Tax-deferred growth (although you can also take advantage of this by maximizing your retirement accounts).<\/li>\n<li>Estate planning tool (pay for estate taxes, leave cash to beneficiaries).<\/li>\n<li>Borrowing capacity.<\/li>\n<li>Lifelong coverage.<\/li>\n<\/ul>\n<h4><strong>Cons of permanent life insurance:<\/strong><\/h4>\n<ul>\n<li>Expensive: High premiums, management expenses, and agent commissions.\n<ul>\n<li>For more about commissions, check out my post about how a <a href=\"https:\/\/www.gunderwealth.com\/whats-a-fee-only-financial-advisor\/\">Fee-Only<\/a> Advisor is compensated.<\/li>\n<\/ul>\n<\/li>\n<li>Surrender period (it should not be considered a short-term investment).<\/li>\n<li>No tax deduction for payment of premiums (unlike some retirement account).<\/li>\n<li>Increased number of riders and acronyms equates to a lot of complexities.<\/li>\n<\/ul>\n<h4><strong>My advice?\u00a0 I would consider permanent life insurance if:<\/strong><\/h4>\n<ul>\n<li>You have maxed out all retirement accounts (i.e., 401(k), backdoor Roth, HSA).\n<ul>\n<li>Speaking of this&#8230;have you asked your employer if your company-sponsored 401(k) gives you access to a <strong>Mega Backdoor Roth<\/strong>?<\/li>\n<\/ul>\n<\/li>\n<li>You have a healthy, diversified taxable account (including an emergency savings fund).<\/li>\n<li>You are looking for guaranteed but moderate growth (think \u201cbond-like\u201d returns).<\/li>\n<\/ul>\n<h4><strong>I would not consider it if you are:<\/strong><\/h4>\n<ul>\n<li>In a low tax bracket.<\/li>\n<li>Using it to purely save for retirement.<\/li>\n<\/ul>\n<h4><strong>Other options?<\/strong><\/h4>\n<ul>\n<li>You could consider term insurance and invest the difference in premium in the market. The thing is you have to do the latter or have someone hold you accountable. \u00a0Do not spend it!<\/li>\n<li>Already have a permanent policy and need to get out of it?\n<ul>\n<li>Surrender the policy \u2013 I would avoid doing this during the surrender period. Also, keep in mind there will be tax consequences above your basis.<\/li>\n<li>Keep the policy \u2013 is it a reasonable diversifier? Are the payments flexible (i.e., it is a universal life policy)? Do you have any life events on the horizon where borrowing against the policy might make sense?<\/li>\n<li>Exchange the policy into a different insurance product that makes more sense for you while reducing tax consequences.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>While I don\u2019t write insurance given that I\u2019m a fee-only advisor, I most definitely analyze the protection need and talk through different scenarios as I believe insurance analysis is part of a comprehensive financial plan.\u00a0 Verify that the amount of insurance makes sense to you: <strong>are you calculating your economic need, or just taking whatever coverage is sold to you?<\/strong><\/p>\n<p>Have more questions about whether you should invest in life insurance? \u00a0<a href=\"http:\/\/www.gunderwealth.com\">Schedule time<\/a> with me when you\u2019re ready to chat.<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>My answer to this: it depends.\u00a0 If someone relies on you economically, then you need insurance.\u00a0 \u00a0But do you select a term or a permanent policy? When you hear advisors and agents suggesting that you \u201cinvest\u201d in life insurance, they are referring to the cash-value component available in permanent, also known as whole or universal [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":1483,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"<!-- wp:paragraph -->\r\n<p>Welcome to WordPress. This is your first post. Edit or delete it, then start writing!<\/p>\r\n<!-- \/wp:paragraph -->","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[22],"tags":[65,66,64,63],"class_list":["post-1478","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technical","tag-cash-value-life-insurance","tag-term-insurance","tag-universal-life-insurance","tag-whole-life-insurance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Should You Invest In Life Insurance? - Gunder Wealth Management<\/title>\n<meta name=\"description\" content=\"If someone depends on you economically, then you need life insurance. 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