All Life Insurance Tips

Is whole life insurance a good investment vehicle and estate planning tool? Or are Mutual Funds better?

I am a Male 29 putting money in 401K upto company match.Ineligible for Roth.Cud max IRA,401K but is tht advised? What about further after tax dollars? These are points I have read on WLI as investment vehicle- Pros: 1)Builds cash value and insures survivors 2)Earnings are tax free 3)Don't have to pay 50% estate tax when transferring proceeds to heirs 4)Can borrow/take loans against built up cash value 5)Gains advertised on products such as Mutual Funds don't include taxes on gains and fees. 6)If you get divorced don't lose half your wealth unlike MFs 7)IRAs are taxed on withdrawal Criticisms: 1)Unused cash value is lost when the investor passes away 2)Fees and costs are prohibitively expensive and eat into gains 3)Loans against LI policy are a nightmare 4)Term LI and investing balance in tax-advantaged funds or MFs is better 5)Advisors suggesting LI as investment are greedy for commissions This selection is a nightmare.Someone honest to god (no salesppl!) plz help!

Public Comments

1. Life insurance is NOT an investment or estate planning tool! I have friends who fell for that sales pitch and paid a lot of money into it for more than 20 years. They retired and couldn't make those payments anymore so they didn't renew and opted to cash out. All they got was about $3K. Buy cheap term life insurance to cover survivors. Max out that 401K for retirement investment. And if you want to invest more, look into mutual funds.
2. It sounds like you've done very good research. You don't say if you have a family. If you do, then you need life insurance. Does your employer offer any? If so, that's your cheapest option and it's term insurance. If not, then term insurance at your age should be relatively cheap. If you don't have a family, who would your beneficiary be? You may not need very much life insurance. Another option to consider is annuities then you really will be confused. But they do offer many of the benefits you mentioned and some of the drawbacks. If you want info on an annuity use a reputable firm. My son is a financial advisor and can tell you about them. If you're interested, send me an email and I'll tell you how to contact him.