A guaranteed minimum death benefit is stated but it may increase if the cash value of the policy goes up. The cash value of investment-linked whole life is invested in your choice of stocks, bonds, money- market funds, and any combination. If your investment choice performs well, the cash value of your investment-linked whole life policy increases, but a minimum cash value may be guaranteed. Premiums are fixed and level; they are roughly the same as what you would pay for whole life. Many investment-linked whole life policies also include an annuity feature. Sales people for investment-linked whole life must be registered with the National Association of Securities Dealers.
If your investments do well, your potential gain with investment-linked whole life can be great. Cash value of the policy can be divided if you choose to spread the risk among several types of investment vehicles. You can change the "mix" of your investments a stated number of times per year with no charge. No capital gains are due when you switch funds and any gains are tax-deferred. You can borrow the cash value of the policy at competitive or lower than market rates.
A disadvantage of investment-linked whole life is that you may forfeit the entire cash value of the policy if your chosen investment "mix" performs poorly. Your contract is effectively rewritten if you make partial withdrawals. You receive investment performance reports but no reporting of how your total life insurance premium is spent. In the early years of the policy, the cash surrender value is small because much of the premium you pay goes to cover company expenses and fees. investment-linked whole life is best considered a long-term, big-ticket financial commitment.
If you need a good protection yet flexible premium payment and potential higher return, investment-linked whole life may be the life insurance option for you.
If your investments do well, your potential gain with investment-linked whole life can be great. Cash value of the policy can be divided if you choose to spread the risk among several types of investment vehicles. You can change the "mix" of your investments a stated number of times per year with no charge. No capital gains are due when you switch funds and any gains are tax-deferred. You can borrow the cash value of the policy at competitive or lower than market rates.
A disadvantage of investment-linked whole life is that you may forfeit the entire cash value of the policy if your chosen investment "mix" performs poorly. Your contract is effectively rewritten if you make partial withdrawals. You receive investment performance reports but no reporting of how your total life insurance premium is spent. In the early years of the policy, the cash surrender value is small because much of the premium you pay goes to cover company expenses and fees. investment-linked whole life is best considered a long-term, big-ticket financial commitment.
If you need a good protection yet flexible premium payment and potential higher return, investment-linked whole life may be the life insurance option for you.
