I sat down with an insurance representitive today and listened to their proposal regarding Cash Value Life Insurance (CVLI) and long term investing. I am a 36 year old guy recently married with no children yet. Since I recently got married, I wanted to start researching life insurance and investments that will benefit myself and family for long term planning. What is your opinion on investing in CVLI? The only investing I currently do are in my companies 401K plan (maxing out the contribution at $17K per year). I cannot contribute to Roth IRA due to my income level.

  • Do you have any IRA at all? Commented Dec 12, 2013 at 2:37
  • No. I own two homes and invest in the 401K but don't do anything else. Commented Dec 12, 2013 at 2:40
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    Then you can deposit to an IRA with no tax deduction, and once the deposit clears, ask the broker to convert it to Roth. See "back door Roth" articles that are easily found. . Commented Dec 12, 2013 at 2:43
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    It is a loophole. Legal, well-publicized. And works best if you have no other existing IRA, else there are tax issues to consider. For all intents and purposes, you can have a Roth, via this 2 step process. I used to call it the Texas two step, but a small magazine named Forbes publicized this as "back door Roth." Commented Dec 12, 2013 at 2:57
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    Note: querant asked about a single product. If you're someone who thinks whole-life's enforced savings plan would be valuable to you, SHOP AROUND rather than jumping on the first one to make a sales pitch.
    – keshlam
    Commented Jan 11, 2015 at 14:12

3 Answers 3


I am of the strong opinion that life insurance should be purchased as a term product and nothing more. The internal expense is usually high, the returns, poor and the product disclosure is often incomprehensible. The only purpose Cash Value Life Insurance serves, in my opinion, is to fund the retirement and college educations of those selling it.

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    Thank you for the opinion. Quite frankly I have no knowledge of life insurance and want to make the best decision for my family. I have about 5K/month of income to invest and want to make the right choices. Any other suggestions? Commented Dec 12, 2013 at 3:00
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    I believe in the stock market for the long term, low cost, either an Index Mutual fund or ETF such as VOO (The Vanguard S&P fund). In the end, investments must have one characteristic, they allow you to sleep at night. The sleep factor helps dictate the recommended asset allocation. Keep reading and learning. Never invest in anything you couldn't explain to a friend over a beer. Commented Dec 12, 2013 at 3:08
  • I agree. I haven't done the research so this is a question. Is it possible that you could get a whole life policy if you were un-insurable for a term, medically or otherwise? Commented Jan 12, 2015 at 22:02
  • @abracadaver: Interesting question but i think it's a separate question and should start a new discussion thread.
    – keshlam
    Commented Jan 15, 2015 at 5:42

I have an answer and a few comments.

Back to the basics: Insurance is purchased to provide protection in case of a loss.

It sounds as though you are doing well, from a financial perspective. If you have $0 of financial obligations (loans, mortgages, credit cards, etc.) and you are comfortable with the amount that would be passed on to your heirs, then you DO NOT NEED LIFE INSURANCE.

Life insurance is PROTECTION for your heirs so that they can pay off debts and pay for necessities, if you are the "bread-winner" and your assets won't be enough. That's all.

Life insurance should never be viewed as an investment vehicle. Some policies allow you to invest in funds of your choosing, but the fees charged by the insurance company are usually high. Higher than you might find elsewhere.

To answer your other question: I think NY Life is a great life insurance company. They are a mutual company, which is better in my opinion than a stock company because they are okay with holding extra capital. This means they are more likely to have the money to pay all of their claims in a specific period, which shows in their ratings: http://www.newyorklife.com/about/what-rating-agencies-say Whereas public companies will yield a lower return to their stock holders if they are just sitting on additional capital and not paying it back to their stock holders.


Almost everyone needs an insurance, you should also probably buy it. If you are good at planning [which it seems from your question], you should stick to Pure "Term" insurance and avoid any other types / variants of CVLI.

CVLI is only advisable if one cannot commit to investing or is not good at saving money, or one feels that one loses money in Term Insurance.

Otherwise term insurance is best.

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    I understand the 'forced savings' aspect. But you then say "one feels that one loses money in Term Insurance." If someone feels that way, they don't understand insurance, and should learn, not throw good money after bad. Commented Dec 12, 2013 at 10:56
  • @JoeTaxpayer I agree. And I have some of my educated friends, who believe Insurance companies make more money in term as they don't have to Pay anything and keep the premium, call them Thieves :) ... I tried endless ... maybe I am not a good at teaching :)
    – Dheer
    Commented Dec 12, 2013 at 11:38
  • @Dheer It is next to impossible to persuade people of Indian origin that whole-life or cash value insurance is not necessarily the best investment vehicle, and that term insurance is not pure and simple thievery but the needed protection that insurance is intended to provide. It is not the case that you are bad at teaching, but that you are trying to teach the unteachable. Commented Jan 10, 2015 at 16:16
  • @DilipSarwate: Ya I know, but keep trying. :)
    – Dheer
    Commented Jan 11, 2015 at 3:36

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