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The Advantages and Disadvantages of Investment Life Insurance

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If you’re looking for the best life insurance policy, you may want to consider an investment life insurance policy. This type of insurance provides you with the flexibility to invest and manage your savings. It allows you to invest in a variety of financial instruments to maximize your returns. You’ll have the option to choose a number of riders to further customize your investment.

First, consider the rate of return. Permanent policies rarely provide a decent return because the cash value is eaten up by expenses and commissions. The insurance agent typically receives 50 percent to 100% of the first year’s premium. The insurer will adjust the rate according to how the policy’s investments perform. This means that a policy with a poor portfolio will earn much less than a policy that pays a higher rate of return. In addition, many insurers offer a low initial rate, but this rate often decreases significantly after the initial teaser period.

Another problem with investment life insurance is that the premiums and charges tend to be higher than those of unit trusts. Insurers also have to pay high sales commissions. To offset these fees, they usually have to raise charges, which can make their products look more competitive. However, not all insurance companies have high costs, so it is important to shop around.

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