The recent developments in investment markets and the poor performance that has resulted have brought about a new appeal to an old workhorse. For investors looking for a diversification in their investment portfolio and a more tax efficient fixed income investment alternative, a compelling argument can be made for the use of Whole Life Insurance.
Whole Life is a permanent insurance contract with level lifetime guaranteed premiums and tax advantaged cash value growth. If the contract also pays the policyholder annual dividends the Whole Life contract is referred to as participating. These dividends can be taken in a number of different ways but the option most often selected to provide the maximum tax advantaged growth is “paid-up additions”. Paid up additions are blocks of single premium life insurance which also pay an annual dividend so these blocks contribute to the building of both significant cash value and estate value (death benefit). In a participating policy all policy owner premiums are pooled under a “participating account”. Read more