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Yes

It depends what you mean by safe. Historically, they have been safe in the sense that insurance companies have generally paid claims and let policy holders take out loans, and cash in on their policies.

However, the cash values are not FDIC insured so if the underwriting insurance company fails, the policy holder might not be able to receive their full amount. Still, most people would consider them relatively safe regarding the company's faithfulness to adhere to the contract.

That being said, a potential problem with buying whole life, universal life or other types of permanent cash value insurance, is that the consumer often does not understand what they bought and why they bought it.

Consumers should be aware of how much of their annual premiums are going to agent commissions, how much are going to their cash values, and how much are going towards the insurance coverage in the contract.

Forthermore, consumers should compare what the same whole life premium outlay amount could provide them if instead they purchased term insurance (much less expensive) and invested the difference in premium in a 401k or IRA mutual fund. Many shoppers have run these numbers and discovered that term insurance and investing separately outside of a life insurance policy better meets their needs.

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14y ago

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Q: Is whole life insurance safe
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