Should A young Professional Invest in a 20 Pay Whole Life Insurance Policy?

Should A young Professional Invest in a 20 Pay Whole Life Insurance Policy?

I have spent the last decade critically analyzing the value of investing in 20 Pay Whole Life Insurance. It has taken years to conclude that it is an extremely effective way to build wealth for retirement and estate planning.

Here are some of the top reasons why a young professional should buy a 20 Pay Whole Life Insurance Policy.

1)     After 20 years the policy is completely paid up. This is ideal if you are over 20 years out from retirement and want to have the plan completely funded before you stop working.

2)     It pays dividends and grows guaranteed cash value for life. Dividends may not be guaranteed but have been consistently paid every year for over a century or at least since inception for most Canadian Insurance Companies.

3)     Cash value is vested each year. This means that even if the market crashes your cash value will not decrease. This also opens opportunities to borrow the cash to make an investment into distressed assets and benefit from the recovery.

4)     You are not forced to take out cash like an RRSP after age 71. The cash value and dividends can remain in the policy tax deferred as long as you want with no age discrimination. Unlike an RRSP which must be converted to a RRIF and started withdrawals the year after you turn 71. Taking withdrawals from an RRSP/RRIF can increase your marginal tax rate and force you to disqualify for income benefits you may otherwise be entitled to by strategically using your cash value instead.

5)     Any cash that is used during retirement would be deducted from the death benefit to provide a pay out to your beneficiaries at death. This prevents you from having to use savings/investments as an estate legacy by using your whole life Insurance policy instead.

The reality is that investing in capital markets is very uncertain and volatile. At critical times when you need funds for retirement, major purchases, or emergencies your investment may be significantly down and cause a major depletion of your long-term savings.

Whole Life Insurance is an incredible wealth building tool where you can leverage the ability to compound your cash value in an indefinitely tax deferred asset.

I am always happy to provide more information about this product!

*Do not take any of this information as financial advice until having a consultation with the appropriate Tax and Life Insurance licensed professionals.