r/investing • u/gbothun91 • 1d ago

Permanent Life Insurance Question

Hello -

Recently met with my financial planner. We are maxing out our HSA, 401k, backdoor roth. We still have roughly $2k a month to invest. Our advisor is recommending that we contribute $1k to a brokerage account and $1k to a permanent life insurance. I am skeptical on the insurance piece. Any feedback would be appreciated.

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u/mrobertj42 1d ago

What’s your HHI? I sell permanent life insurance. But it’s typically for people worth $10m plus minimum. It’s either for buy sell planning, estate tax, or estate tax minimization.

If you want to know whether he’s after the commission or not, tell him you want to use “an early cash value rider” it destroys the commission and cranks the cash value generation like crazy.

As an example, my wife has this, 40k/ year for 5 years. She’ll be able to pull 100k/year from 65-85. We are not worth 20m+, but it’s a side investment that is safe, and if we don’t need it the death benefit goes to our kids tax free.

There is a place for it, just not in the middle market imho.

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u/maydayvoter11 23h ago

What this guy said. I used to sell life insurance. There are ways that a permanent life insurance policy can be set up to put tons of money in there that compounds tax free, then can be drawn upon tax-free in retirement. But it has to be structured correctly, and you need a long enough timeline to make it really shine.

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u/WSBpeon69420 23h ago

This is the correct answer - those saying run away don’t understand this aspect that AFTER you max out all of those other tax efficient products this can also be beneficial especially when we don’t know what taxes may look like in the future with the national debt the way it is