Consider the benefits of putting extra capital into a house vs. other options such as cash value permanent life insurance. |
Let's start by reviewing the benefits of capital invested in a house. The value of your house does grow tax deferred, which is a tremendous benefit. Under current tax law, there are opportunities for tax free distribution of the growth - to certain limits. You can put a lot of money in a house, so there is an opportunity for high contributions - but that doesn't necessarily mean the value will be proportionally better when it comes time to sell. A house may offer collateral opportunities if there is sufficient equity and you qualify for a loan with a lending institution. Capital investments in a primary residence are typically considered safe investments. Certainly it's a great benefit to deduct mortgage interest payments if you qualify to do so. However, making additional capital payment toward a mortgage will minimize both the interest paid and the associated deduction. Let's now review the benefits of permanent life insurance. The cash value within an insurance policy grows tax deferred, which is beneficial. When receiving money from a life insurance contract, there are often options to receive some or all of the distributions tax free (to you and/or your heirs.) Since you have access to the capital, potential returns are not limited to those earned within the contract. Life insurance contracts typically can be written to provide high levels of contributions as well as additional benefits and riders such as disability or terminal illness access to funds. Life insurance contracts often offer collateralization opportunities with non-structured payment option loans with the associated carrier. Depending on the product, cash value within a policy is potentially safe. Some policies may offer no-loss as well as guaranteed loan option provisions. Policy loan payments are often unstructured in nature - meaning you pay them back on the schedule that you determine. Liquidity, use and control of access to the capital within a policy is of tremendous value especially at times when other capital options are constricted. |
No math presented on this screen. |