Is Life Insurance The Smart Investment During Troubled Times?
With an uncertain future for the economy, is life insurance the smart move? Usually during troubled times and a falling stock market, investors would retreat into the bond market for safety.
However, the bond market may be the last place to seek shelter right now. Trouble in the bond insurance market and the downgrading of some the largest firms in the industry has not only put a damper on new issuance but has devalued all of the bonds they currently insure.
The insurance industry has been doing fairly well amidst the chaos currently embroiling most of the financial sector. John E. Girouard, the founder of the Institute for Financial Independence, say’s that whole life insurance is the way to go in the article ‘The Investment Bomb Shelter for Scary Times’.
“Few people know that the life insurance industry was one of the few economic sectors to survive the Great Depression intact. It was one investment that kept its promises.”
“Buying a policy from a mutually-owned company, you become an owner instead of a customer. It’s like becoming your own bank.”
Whole life is just one aspect of life insurance that is doing well, annuities are also staging a strong comeback as sales grew in the third and fourth quarters last year.
The characteristic that makes life insurance attractive right now is their ironclad guarantees, not to mention their favorable tax shelter implications. While they may not offer the highest returns that other investment vehicles might, there is no fear of loss like in the stock and bond markets.