How to Use Your Life Insurance as an Investment

Jan 26, 2024 1 min read

While the primary purpose of life insurance may be to provide financial support to your loved ones after you pass away, it can also serve to help you save for retirement and accumulate cash value. A recent NerdWallet study found that 23% of Americans who purchase life insurance do so to build cash value and supplement retirement income. 

Investing in Life Insurance

The decision to purchase life insurance ultimately boils down to your financial goals. Here’s what to keep in mind when it comes to investing in life insurance.

What Types of Life Insurance Can Be Used for Investing?

There are different types of life insurance with many additional options available, but only permanent policies such as whole life and universal life offer both a death benefit and cash value component. Learn how these two types of permanent life insurance are used to meet different investment goals.

Whole Life Insurance

Whole life insurance provides guaranteed protection for your whole life. As a policyholder you’ll pay consistent premiums and have guaranteed cash value accumulation. Whole life insurance is ideal for those with long-term goals. You also have the option to borrow from your whole life policy to help purchase a home, start a business or even fund retirement.1

Universal Life

Universal life is a form of permanent life insurance that covers you throughout your lifetime and generally offers more flexibility than whole life insurance. Along the way, you can adjust things like your premium payment amounts and frequency2, and your death benefit, to meet your needs and goals. Similar to whole life, universal life insurance allows you to also borrow from your funds for future financial needs.1

How to Use Life Insurance to Build Wealth

With our Indexed Universal Life (IUL) Insurance, you can protect your loved ones and save for retirement at the same time. In addition to offering a traditional death benefit for your beneficiaries, you have the option to use your policy while you’re living through planned loans and withdrawals — all while earning interest on the policy in one of two ways:

  • Fixed Account: Funds in the fixed account earn interest on a daily basis, based upon an interest rate that is declared periodically by the company. It will never be less than the guaranteed minimum of 1 percent.
  • One-Year Point-to-Point: Your IUL policy also has the potential to grow more quickly than a traditional life insurance policy by earning interest based on market performance if the one-year point-to-point index crediting option is chosen. At the same time, it offers protection from market downturns. Funds in the indexed strategy earn interest credits based upon the movement of the index. When the market does well, so do you, and when the market is down, your interest credits will simply be zero.

Start Building for the Future Today

Want to learn more about investing in life insurance? Your local Farm Bureau agent can help. We’ll answer questions and help you choose the right life insurance for your needs.

1 Any loans from the policy’s accumulated value will reduce the death benefit if the borrowed funds, plus interest, are not repaid prior to time of death. 

2  Your premium payments must be sufficient to maintain coverage; insufficient payments will result in policy termination, which may be a taxable event. Increases in coverage are subject to underwriting review and approval. 

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.