Insurance As an Investment

Is purchasing an insurance policy ever a good investment?

According to experts at CNN Money, it would be a good investment if an insurance policy did not have so many fees and charges, often hidden from prospective buyers. For example, a cash value policy may have such fees as marketing and sales commissions, a surrender charge if you stop paying the premium before approximately ten years (often more than one year of the premium), investment fees that can top 2% per year (on some variable life policies), and a “mortality and expense” fee, often hidden, that can be one percent or more. This can be compared with the average management fee of many passively managed mutual funds of less than 0.5%, and management fees of actively managed funds of approximately 1%. This will depress any returns you hope to receive while your policy is active and invested.


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