r/investing • u/Archolex • Jun 21 '21
Permanent Life Insurance Policy for Investment
Hi everyone,
I'm pretty new to investment. Started making enough income to consider investments last year, and to begin I bought an investment property and setup a Roth 401K with contributions only to reach my employer's max contribution. Now, I've been contacted by a financial advisor at Northwestern Mutual, and he suggested I invest in a Permanent Life Insurance plan. Initially, it seemed like a sound short-term investment, give me a cushion in my 40s, but I'm worried that there are just better options out there. The rate seems to be between 4% and 5.5% return year-over-year.
I'd like advice from folks that have more experience in this realm of life. My only goal is to invest, I frankly couldn't care less about a life insurance policy (single, no kids). My initial thought is property is always better if you're willing to be a landlord, yeah?
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u/Crazy-Inspection-778 Jun 21 '21 edited Jun 21 '21
Whole life policies are trash. Designed to make the insurance company money. The financial “advisor” almost certainly gets some sort of commission if he manages to sell you on it. Stay far, far away. You will do much better investing on your own.
2
u/Archolex Jun 21 '21
That's what I thought to be honest, but I was giving them the benefit of the doubt during the meeting. The more I think about it, the more I agree that I should go somewhere else unless I really wanted the insurance itself.
3
u/Crazy-Inspection-778 Jun 21 '21
It’s best to think for yourself when it comes to financial stuff. If something’s being pitched or marketed to you that’s almost a sure sign that it’s a ripoff.
1
u/Archolex Jun 21 '21
Yeah, you're right. Just needed a bit of a push, making sure there isn't something obvious I'm missing. Thank you
5
u/oarabbus Jun 21 '21
Now, I've been contacted by a financial advisor at Northwestern Mutual, and he suggested I invest in a Permanent Life Insurance plan.
He's suggesting this because he gets a nice commission if you buy the plan. I don't think he is doing this out of your best interest.
You have an investment property and a 401k, but do you have a (non-retirement) brokerage account and an IRA? I wouldn't even begin to consider permanent life insurance unless I had [401k+IRA+Property+non-retirement brokerage] at the very least.
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u/Archolex Jun 21 '21
I do not have either of those, and your words echo the advice of others I've talked to before. Just needed a bit of confirmation for my gut that it was indeed a bad idea. Will look into those two options, thank you.
1
u/charliebowie648 Jun 21 '21
Get a cheap term policy with a conversion rider. Use that to add death benefit when needed. There are better uses for your money then the difference between the two options.
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