Here is the situation. I am looking into a whole term policy with Northwestern Mutal. They pay a dividend and thier annual return is rather decent. Historically thier return has has around 5 percent a year dismissing the bubble of the 90s. So investment-wise they are somewhere around a bond (which doesn’t mean much currently)
It seemed like a decent ROR over the life time coupled with the add bonus that someone would get some profit from my untimely demise.
I admit that I have not looked into the cost benefit of term coupled with other investment vehicles but it seems like that is what is being suggested.
But one very large point the broker emphasizes, and something I have not investigated, is that money paid in dividends out of this account is tax free. So his claim is that current ROR coupled with the tax free dividends brings the effective rate up much higher.
Can anyone counter the last statement or tell me what the other “gotchas” could be?
