Participating Whole Life Insurance as an Investment Vehicle - Thoughts?

[Mikkel]

I have been speaking with a financial advisor recently about different investment vehicles that can set me up well in the future. I was essentially looking for investment strategies that are not the most well-known but have powerful benefits if implemented correctly.

My financial advisor understood what I was looking for, but his suggestion surprised me:

Participating Whole Life Insurance through a Mutual Insurance Company

I was certainly not looking for life insurance, as I am not in a position to need life insurance at this moment, but he explained to me that participating Whole Life insurance could also be used as an investment vehicle. The way I understood this was, and take my analysis with a fairly large grain of salt, that these whole life insurance companies will begin paying you dividends and that you can borrow money from the insurance companies if say you wanted to invest in a real estate deal or a business(or for whatever other reason you wish). Because the money is being borrowed, the money you were accruing dividends from is still with them and so you are still getting the dividends and if you decided to take a loan from them, the effective interest rate would be less than normal due to the dividends you are receiving.

Now, I know the FLF are generally no Dave Ramsy fans. However, I can't ignore his harsh words against ALL Whole Life Insurance. Including that it is a scam.

My question to the forum is, what are your thoughts on Participating Whole Life Insurance as an investment vehicle? Is it a scam, or can it be used as a powerful investment tool? Are there better investment tools other than Participating Whole Life Insurance?

To those who have solid investment plans in place, what investment vehicles have you found to be powerful or valuable?

*I also recognize that all suggestions made in this thread are merely suggestions and I and anyone else reading should do further due diligence on the subject matter.*

 

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[Alxander]

Look into Charitable Trusts (Valur can help with this for US persons)

It seems like an easier, less hacky way to defer taxes and invest the proceeds.
There are multiple type of trusts, one that works better for IPOs, other work better for income or capital gains.

I think with the life insurance method, a lot more people will be making money off of your wealth and you will have less control over it. It's probably a bit harder to buy real estate under the trust instead of buying it with money from the loan, you can't cash out the trust in your personal bank account - but I would still feel more safe with a trust.

I don't care too much about personal income/capital gains, so I'll be becoming a non-US resident next year and sharing an off-shore company with non-US co-founders and pay a near 0% corporate tax. Otherwise Puerto Rico is a great option, for the rest that's really all you have in terms of tax optimalization other than real estate but I don't have much knowledge on that.

Alex Hermozi made a pretty good video about it, his opinion is that thinking about taxes too much is a trap, better to focus on income. But when the government starts taking half it should certainly be a thought to have.