Posted on: Wednesday, June 23rd, 2010

Investment News Finds Cash Value Life Insurance “Better than Gold” in Life Insurance News

There isn’t a lot of faith in Wall Street among the general public these days, particularly in light of the recent lows, and the overall economic downturn of the two last years.

But at the Huffington Post an “alternative investment” with greater performance potential than gold has received the thumbs up – cash value life insurance.

Gold, usually the standard of stable investments, isn’t as wise a choice as some would believe. In fact, according to the article, gold has actually underperformed Treasury Bills for the last 35 years, and has done so with more than 17 times the risk.

Relying on cash value life insurance may come as a surprise option to those who have always believed that individuals would get a better return investing in term insurance, and then using the difference between that and cash value to create a separate portfolio.

But according to Dan Solin, it’s definitely possible to design a life insurance policy that also features an effective investment vehicle, and could offer your portfolio greater return and stability than gold.

A cash value life insurance policy, over the long term, can often outperform bonds, can provide you with an emergency fund, and is overall less volatile than most other types of investment.

The key is to speak to a life insurance specialist about a “blended policy,” a type of policy that isn’t always advertised to the public. A blended policy combines all the benefits of both whole life insurance and term life insurance into a single policy.

As time goes on, the term portion of your life insurance is replaced with whole life insurance. This blended policy – which gets its name by combining whole and term life and gradually replacing the term – should give you a higher cash value immediately, and higher death benefits because of lower sales costs.

There are other benefits as well. For example, if you find later in life that your cash value life insurance policy offers more money than your beneficiaries would need, you can also withdraw cash up to the amount of premiums paid, and you can do it tax free.

And if you hold the policy until you die the tax deferred gains generated will become tax exempt cash for your beneficiaries.

Keep in mind that blended life insurance policies aren’t offered to everyone, and it’s best to go with the more highly rated life insurance companies when building a special policy designed as an investment tool.

And don’t borrow to heavily against a policy like this, in case you lose the policy and end up with debts that could ruin the peace and tranquility of your retirement.

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