Читать книгу Mutual Funds For Dummies - Eric Tyson - Страница 25

Some insurance agents love to sell cash-value life insurance. That’s because these policies — usually known as universal, whole, or variable life policies — combine life insurance protection with an account that has a cash value. They generate big commissions for the agents who sell them.

Cash-value life insurance isn’t a good investment vehicle. First, you should be saving and investing through tax-deductible retirement savings plans, such as 401(k)s, SEP-IRAs, and IRAs. Contributions to a cash-value life insurance plan provide you no upfront tax benefit. Second, you can earn better investment returns through efficiently managed funds that you invest in outside of a life policy.

The only reason to consider cash-value life insurance is that the proceeds paid to your beneficiaries can be free of estate taxes. Especially in light of recent years’ tax law changes, you need to have a substantial estate at your death to benefit from this feature. For tax year 2022, the federal estate tax-free limit is $12.06 million. Married couples can pass along double these estate tax–free amounts (note that states often have lower limits and bypass trusts may be necessary to double these amounts at the state level). And, by giving away money to your heirs while you’re still alive, you can protect even more of your nest egg from the federal estate taxes. (Term life insurance is best for the vast majority of people. Consult the latest edition of my book Personal Finance For Dummies [Wiley], which has all sorts of good stuff on insurance and other important personal finance issues.)

Don’t fall prey to life insurance agents and their sales pitches. You shouldn’t use life insurance as an investment, especially if you haven’t exhausted your ability to contribute to retirement accounts. (Even if you’ve exhausted contributing to retirement accounts, you can do better than cash-value life insurance by choosing tax-friendly funds and/or variable annuities that use mutual funds; see Chapters 11 through 15 for the details.)