It typically has a higher rate of
growth than whole life insurance.
Not exact matches
Historically, the
growth from stock market has proved to be better
than the
growth of the
whole life insurance.
Editorially, Kiplinger's magazine has championed over the decades a number of personal finance strategies and investment products that later became popular «conventional wisdom»: the superiority of systematic investing (dollar cost averaging) over market timing;
growth stocks that paid little or no dividends but invested in new technologies; mutual funds, especially no - load funds; stock index funds; term
life insurance, rather
than whole -
life; and global investing.
While this makes variable
life insurance policies a better investment option
than whole life policies — the potential for higher, tax - deferred
growth makes it a «super-IRA» — you can only invest in the sub-accounts available through your policy.
While a
whole life policy's cash value is typically guaranteed to grow a certain amount, it's smaller
than the potential
growth of a variable
life insurance policy.
While this makes variable
life insurance policies a better investment option
than whole life policies — the potential for higher, tax - deferred
growth makes it a «super-IRA» — you can only invest in the sub-accounts available through your policy.
Because of this, indexed universal
life insurance is used by many policy holders who are seeking higher potential
growth (
than that of
whole life, or even CDs and money markets), yet with protection of principal.
However many are considering buying term
life insurance at a lower rate and invest the difference on high -
growth products like stocks and mutual funds where the returns are much higher
than what you get as accumulated cash value on your
whole life insurance.
These investments can provide the opportunity for market related
growth inside the cash component — which can offer much more
growth potential
than whole life, or even a regular universal
life insurance policy.
While this can allow the opportunity for more
growth than a
whole or universal
life insurance policy, it can also be more risky.
What differentiates an Indexed UL policy from other types of permanent
life insurance used for cash accumulation is that the
growth of the policy's cash value is based on the performance of an equity index (usually the S&P 500), excluding dividends, collared by a cap and a floor — rather
than based on a flat crediting rate that is established by the
insurance carrier and adjusted from time to time (a product referred to as «current assumption universal
life»), based on a flat dividend rate that is established by the
insurance carrier and adjusted from time to time (a product referred to as «
whole life»), or based on the actual investment returns of specific equity investments (a product referred to as «variable universal
life»).