Life Insurance as an Investment Tool

You can use life insurance as a way to save and invest for the future by choosing a cash-value account life insurance policy. Don Allred Insurance serving Burlington, NC can help you set up a life insurance policy that helps you build wealth while protecting your future and providing a death benefit to your beneficiaries in the event of your demise.

In some ways, a cash value account life insurance policy works just like a typical whole life policy. You pay premiums each month or quarterly and that funds your death benefit. You name a beneficiary or beneficiaries who receive payment of a lump sum named in the policy upon your death.

The difference is that you pay a slightly larger premium, and the overage gets deposited into a savings account – the cash value. This savings account amasses value either as a typical savings account, a money market savings account, or an investment account. Some of these accounts provide a guaranteed return, such as those linked to an investment account. This reduces the volatility of the potential losses.

Those that function as a savings or money market account typically use an interest rate between two and five percent. While this doesn’t provide a high yield in the sense of a high-performing stock, it does provide a guaranteed rate of return. The savings account interest applied to these cash value accounts also typically exceeds that of a regular savings account.

The other advantage of these accounts is that you can typically pay into them tax-free. You pay in pre-tax from your paycheck, then when your beneficiaries receive the death benefit, they only pay taxes on it if your estate exceeds a specific amount.

Contact Don Allred Insurance serving Burlington, NC to learn more about the many ways life insurance with a cash value account can help you plan for your future. Call us today!