SMART MOVE_Is Life Insurance an Asset?

by Patrick Miller, CBLife, The Club’s Insurance Partner

Many folks look at life insurance as a necessary expense that we incur to provide financial protection for our family. We often look at life insurance like we do our automobile insurance, homeowners insurance or health insurance. If we are talking term insurance that would fit the description of an expense that buys a product that provides protection for specific assets. However, if we consider some form of permanent life insurance, we add the element of an asset to the equation.

What Counts as an Asset?

An asset adds value to a person or business (puts money into your pocket). It is considered a tangible asset. Tangible assets are those that can be touched.

Some examples of tangible assets:

  • Real estate (such as buildings and land)
  • Precious metals (such as gold, silver, copper and platinum)
  • Mutual funds, stocks, bonds
  • Money market accounts
  • Certificates of deposit, or CDs
  • Annuities
  • Cash value life insurance

Different Types of Life Insurance

There are two primary types of life insurance: term vs. permanent life

Term Life: Term life is a contract between the insured and insurer for a specified period of time, i.e. the “term” of the policy. Term life is similar to renting an apartment or home. You pay rent in exchange for the right to live in the home. However, you don’t get your rent back when you are done renting. And you landlord will eventually raise your rent. Term life insurance is not an asset.

Permanent Life: Permanent life insurance includes ordinary life, also called whole life insurance, and universal life insurance. Each type of permanent coverage has its benefits and unique features. You can choose whole life, universal life, indexed universal life and variable universal life. Each type of permanent coverage has its benefits and unique position as an asset. Determining the best life insurance policy for you comes down to your personal goals and objectives.

Whether or not we define life insurance as an asset will depend on what type of policy we are referring to. Term life is not an asset. Term life insurance would be defined as a “pure” insurance policy that pays out a death benefit, but has no cash value accumulation.
However, permanent life insurance is an asset. A cash value life insurance policy is an asset that can be designed to increase in value, both cash value and death benefit, over time. Permanent life insurance typically builds cash value. Many permanent policies have a sizeable amount of cash value accumulation.

CBLife adds an additional option to a permanent life policy, a tax deferred annuity option that pays a handsome rate of return, is guaranteed to never go down in value and can be set up as a tax-free ROTH IRA.

CBLife is The Club’s partner for four areas – life insurance, critical illness insurance, retirement income and accident medical expense insurance. Currently the Club offers three CBLife products: the Security Builder Plan, the Timber Ridge Critical Illness Plan and the Accident Medical Expense Plan. Ask your Club Counselor for details.
You can contact CBLife at (888) 443-8829.