'It seems very pricey but it's also an investment?': I'm considering an Index Whole Life Insurance plan, but is it worth the cost for long-term care and tax-free growth?

div class=”md”>Hey Money Minder, my name is Financial Explorer and I recently met with a financial advisor to see if my retirement plan is on track. My husband is maxing out his 401k and I have a 457 and pension. The advisor suggested Index whole life insurance from North American for tax-free growth and long-term care backup. It’s pricey at 500-1k a month per person. Is it still worth it if we pay less? Would it be smart for my husband to use 401k money for this?

I’m not sure if this is a good idea. Is there anything I should watch out for like hidden fees or withdrawal issues? Can we empty it out if we can’t keep up with payments? I just need some unbiased advice from you.

Thanks a bunch!

Edit/Update: Big thanks to everyone for the advice. I’ve learned a lot and realized this might not be the best move for us. I’ll be seeking a fee-based advisor now. Much love to you all! <3

Hi there! It’s great that you took the initiative to meet with a fiduciary financial advisor to ensure your retirement planning is on track. Your concerns about long-term care and financial stability are valid, especially after seeing the challenges your grandma faced.

Regarding the Index whole life insurance plan that was suggested, it’s crucial to carefully evaluate whether it aligns with your financial goals. While it may offer tax-free growth and long-term care benefits, the monthly premiums of 500-1k per person can be quite high. It’s essential to assess whether this expense fits comfortably within your budget and if there are more cost-effective options available.

Considering your husband’s suggestion to reallocate funds from his 401k towards the insurance plan, it’s advisable to proceed with caution. Withdrawals from retirement accounts can have tax implications and may impact your long-term savings goals. Evaluating the opportunity cost of redirecting these funds is crucial before making any decisions.

In terms of fees, it’s essential to understand the fee structure of the insurance plan and potential penalties for early withdrawals. Additionally, clarifying the flexibility of adjusting monthly contributions and the process for accessing funds if needed can provide you with a comprehensive understanding of the investment.

Based on the feedback shared here, exploring alternative retirement planning strategies with a fee-based advisor might be beneficial. This approach can help you navigate your financial options objectively and tailor a plan that aligns with your specific goals and circumstances.

All the best from THE MONEY MINDER! Thank you for reaching out for guidance on this important financial decision.