Should You Consider A Cash-Value Life Insurance Plan?


Filed under: Retirement


PAre you currently maxing out your retirement plan contributions, but still looking for a way to expand your savings opportunities? Do you fall into one of the higher tax brackets, and need a way to pass assets to your heirs while bypassing the estate tax? There are several reasons that a cash-value life insurance plan could be the answer to your dilemma.

How a cash-value life insurance plan works. Most people are familiar with traditional life insurance policies. You sign a contract with the provider, make premium payments for a predetermined period of time, and then if you die during that time, your beneficiaries collect a “death penalty” in the amount of the contract. It’s pretty straightforward, and protects your dependents against the loss of your income.

A cash-value life insurance plan works a bit differently, because it builds cash value over time. You can actually access this value during your lifetime, for various reasons, so it works a bit more like an investment than simply a protective policy. It can also help you protect some of your net worth from the estate tax when you pass away, because assets held in a life insurance policy are not subject to the tax.

There are some important things to know if you’re considering a cash-value life insurance plan. If you do decide to invest in one of these contracts, consider following these guidelines:

  • set it up like an investment from the start
  • minimize the death benefit
  • overfund the policy to the MEC line
  • minimize fees and expenses
  • fund the policy annually (instead of monthly)
  • pay it up as soon as possible, to minimize required future payments
  • ensure that only a reasonable percentage of your assets are being diverted to this investment vehicle

A cash-value life insurance plan is not right for everyone, but it could be a good fit for you, depending upon your needs. To learn more about this unique insurance product, give us a call. We can help you weigh your options, and decide if this product is right for you, or another one might be a better fit.



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This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .