Whole Life Insurance & Real Estate

[Ryan D]

I'm wondering if anyone has any advice/opinions on using whole life insurance to supplement my real estate investments. I'm currently 25 and am debating on whether or not I should set up a policy now while I'm "young". I would fund until I turn 65 and after which the policy would still continue to grow (DB and CV) Also, I would be able to take out cash value at any time (tax free) which could help grow my real estate investments. I was thinking about setting aside $100 per month. I've heard a lot of talk about this lately and am having trouble filtering the good advice from the bad. AKA the advice people selling life insurance are giving. One of my mentors had a whole life policy at one time but canceled it after a few years and now only has term he swears that whole life is a scam. Anyone else have thoughts/words of wisdom?

[J Scott]

I'm not an expert on insurance, but have done a good bit of investing in my life...so my response comes from that perspective...

Insurance is NOT a good investment, unless you're the insurance company. While whole life insurance may give you peace of mind, when you break it down, the value just isn't there. When you're young, you probably don't have many dependents that can't fend for themselves if something should happen to you. In your 30s, you will likely have a family and will want insurance -- luckily, most of us are pretty healthy in our 30s and can get a reasonably priced 20-30 year term policy. Then, when you're in your 50-60s, hopefully your children are self-sufficient and you have saved enough (or have enough passive income) to support a spouse long-term if something should happen to you.

So, I say to take your money and put into higher yielding investments in the short-term, get term life when you have dependent children, and plan wisely to ensure you have the money to support family when you hit 60+...

Just my opinion, though I've heard similar from plenty of financial advisors...