Life insurance policies can be structured to serve as investment vehicles With the cash value component policyholders can allocate funds to different options within the policy such as with stocks or bonds or mutual funds This allows the policyholder to benefit from market growth while enjoying the security of a death benefit These investments grow at a tax deferred basis meaning that you won't pay tax on it right away You'll pay tax on it later on down the road usually towards retirement age and at that point your tax burden is going to be far less than they might be during your prime earning years Leveraging life insurance for investment opportunities typically involves accessing the policy's cash value component Policies such as an IUL or a traditional whole life insurance policy they build up cash value over time because part of the premium that you pay is invested through the insurance company and then they reward you for this investment by paying you what's typically known as an interest payment.
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