Using insurance as an investment vehicle is gaining traction among some Americans, with 23% of life insurance purchasers doing so to build cash value and save for retirement, according to a NerdWallet study.
Understanding Insurance Investment Options
Whole life insurance policies include an investment component called cash value. A portion of your premium goes toward the cash value, which grows tax-deferred.
Insurance investments can offer more stability and tax advantages than other investments, such as stocks and bonds. However, they may also come with higher fees and lower returns, making weighing the pros and cons crucial.
Manage cash value
Be strategic about using your policy's cash value. Withdrawing or borrowing against the cash value can reduce the death benefit, so consider other options before tapping into these funds.