Life Insurance v/s Mutual Funds v/s Shares. Which one is the

Posted: Sun Nov 04, 2007 07:57 pm Post Subject:

IMO, life insurance has its place in a portfolio and depending on the type of LI, it can gain value faster than others.

There is a type of policy called Variable Life Insurance that invests cash values in different ways, including mutual funds, money markets, and even stocks (if you choose) I believe.

One thing that you must understand is that life insurance is not meant to be a means of quick cash accumulation. In fact, you will find that there really is no way to safely accumulate cash quickly. By quickly, I mean that you cannot expect to safely take $10,000 today and make it $20,000 next year. It can be done, but with this comes a large amount of risk. You need to consult a licensed investment adviser. He is trained to balance your goals against your risk aversion and help you select proper investments.

Posted: Sun Nov 04, 2007 08:51 pm Post Subject: Yep !!!

Yeah datz a Sure thing. But considering that we could risk some money, guess Shares are the best place to invest money in the near few years !!!
Of Course with the help of some brilliant brains, investing in the right share at the rite time cud be the right call. Also most of the LI's have a Compounding structure, Where the money compounds and grows faster.

Posted: Mon Nov 05, 2007 02:36 pm Post Subject:

As my point of view Mutul Funds is the best. Nowdays many leading companies starts mutual funds. Shares you can't believe. It may fall or it may down. Possibilities are more to fell. But in Mututal funds, you will get some good money compare to shares. Agree and Disagrees are welcome..

Posted: Mon Nov 05, 2007 05:57 pm Post Subject:

Good question, and be careful of what you do.

The IRS has, over the years, placed many different rules in the Internal Revenue Code that separate the tax situations when comparing life insurance and investments. They are now about as similar as crow bars and after-dinner mints.

According the the IRS: a life insurance policy CANNOT be termed an investment legally. They have nothing in common, and should NOT be used as a financial growth vehicle. That is what investments are for.

Are there investment opportunities within a life insurance policy? Yes...but not what you think. Life insurance is required to be designed primarily to provide a death benefit, and not a means of accumulating $$ in an attempt to profit.

Look up the "cash value accumulation test" and "cash value and corridor" test through the IRS. If you have too much cash in a life insurance policy at any period of time, you will LOSE your life insurance tax benefits.

My advice would be to speak with a CFP (Certified Financial Planner) who also holds a CLU designation. Those are the people who know what's what.
Tread carefully...there's a lot of pitfalls when trying to make a life insurance policy an investment....

InsTeacher 8)

Posted: Tue Nov 06, 2007 05:10 am Post Subject:

Thanks InsTeacher

Posted: Wed Nov 07, 2007 02:39 am Post Subject:

I'm going to have to agree with InsTeacher. Life insurance is, quite simply, not an investment. In fact, I have boxes of case law regarding that very subject and several agents (who no longer have licenses to sell insurance) who used to sell life insurance as such.
Always remember that a life insurance policy's cash value is nothing more than an overpayment of premiums - plus interest. And as a policy's cost of insurance (C.O.I.) increases over the years, that cash value/accumulation fund/savings/etc. has to subsidize your premium payments. That's just the way life insurance works.
Mutual funds, equity indexed annuities, 401k, IRAs, and a host of other products are far better investments (in the big picture) than life insurance. I will agree that you need to speak with a qualified financial advisor before making a decision.
Property however is red hot right now. Speculators are calling this a "sophisticated buyers market". This means that anyone with some extra money and the ability to negotiate effectively, can get property (in CA anyway) for around 55 cents on the dollar. The deals are definitely out there for the taking.

Posted: Wed Oct 29, 2008 04:59 pm Post Subject: insurance

why mutual fund is better than insurance?

Posted: Wed Oct 29, 2008 06:11 pm Post Subject:

Kamlesh, I'm not sure I understand your question / response.
Help me out here a little and I'll do my best to answer you.

Posted: Sun Nov 09, 2008 06:53 pm Post Subject: insurance is insurance

all the insurance mentioned above are all good they all can help you in a variety of ways but if it is money you need i tel you you can not eat from your life insurance, so try and get insured in almost every part of your life

Posted: Thu May 21, 2009 06:48 am Post Subject: queries

questions in comparision with life insurance and mutual fund