What are the other advantages of cash value in whole life insurance?
Cash value inside the policy is creditor-proof in most states. This makes whole life insurance a sort of double-indemnity policy by not only protecting your family should you die suddenly, but also, by protecting your family should you be sued or have to declare bankruptcy. Whole life insurance with a solid insurance company has an average internal rate of return of 5% over the long term. In addition, by law, an insurance policy is tax-deferred, so you won’t pay any taxes on that growth. And, under current tax law, you can take out a tax-free loan on a permanent policy. This adds an additional 2% to 2.5% onto your rate of return. Lastly, the monetary savings of the term insurance premiums that you don’t have to pay — you are getting life insurance coverage, so you do not need to buy term insurance for the same amount — add another 2% to 2.5%. So your average total annual rate of return will be about 10%. Furthermore, you get this return while avoiding stock-market volatility, and if yo
