How Does Life Insurance Work As An Investment? 
I am going to answer this question as someone who sells whole life and universal life only . I do not sell variable life insurance , which is typically considered an investment . First of all , I think the word `` investment '' does not really apply to life insurance , regardless of the type of product . This is because life insurance is first and foremost intended to provide a benefit to survivors . Any cash it develops is nice to have , but it is secondary . The first priority in buying life insurance should be getting the most attractive premium for the entire time you need coverage . Even with very aggressive underwriting , that cost can be higher than the costs associated with conventional investment products . Now , life insurance does have specific tax advantages . These include tax-deferred cash accumulation , and income-tax free benefits . You should speak with your tax advisor for more details . If the insured is young enough , and qualifies for a low enough rate , and is in a high-enough tax bracket , then the cost of his life insurance might be lower than the taxes he would pay on an investment outside life insurance . Here life insurance may be considered a smart `` investment . '' In most other cases , life insurance would not be a smart investment . But , with a strong product from a strong company , the guaranteed cash value in a whole life or universal life product could be significant . You could get more bang for your buck inside life insurance that you would from a standard conservative investment . For that reason , people do use life insurance as the guaranteed or conservative part of their financial portfolio . 