Life Insurance as an Investment

  • 2 The term "investment-life-insurance policy" is used here to represent policies that have a large "cash-surrender value" throughout most of the period they cover, such as limited-payment life policies and endowment policies.

1928 - AP - The Investment Element in Life-Insurance Contracts, S. H. Nerlove - 22p 

  • 2020 - NAIC LIIIWG - Richard Wicka, Birny Birnbaum - Policy Overview
  • LC - Kaldenbach - <Does it say anywhere on here retirement or investment.
  • Youtube video - young couple, most money into IUL
  • NAIC -
    • Birny: people are buying IUL's for Retirement
    • Prudential Woman?? - These aren't Investments
  • LC - Walker vs LSW - Stemler - Kelly - Executive
  • How to Retire in the Magical Retirement Income Castle in the Clouds, Lawrence J. Rybka
  • MetLife
  • IUL
  • LIRP 
  • PBS
  • NAIC
  • 2005 11 - GAO - Financial Product Sales: Actions Needed to Better Protect Military Members - 88p -  [link]  -  Snippets


Examples include:

  • Complainants were sold a whole life policy that provided no short-term liquidity except through loans or surrender.
  • The complainants were in their sixties at the time that the policy was sold.
  • Their stated purpose for purchasing the policy was to provide an income stream upon retirement.
  • The whole life product did not meet these needs and the Department <Vermont> was able to reverse the transaction.  (p125)

2000-1, NAIC Proceedings

John H. Filer, Chairman of the Board, AETNA Life & Casualty

(p37) - Whole life insurance is not partially insurance and partially savings.

  • It is wholly insurance.

It is not designed to provide for the possibility of economic gain in return for a risked sum of money.

  • That's an investment.

Nor is it designed to accumulate deposits of money building toward an individual or family goal as the depositor remains alive to make the deposits.

  • That's a savings account.

It is designed to provide a guaranteed benefit at death, whenever death ocours, in return for a price which is expressed as a fixed periodic premium.

  • That is what it is, that is what it does.

1979 0710 and 1017 - GOV (Senate) - FTC Study of Life Insurance Cost Disclosure - Senator Cannon - [PDF-592p]

  • In its June 7, 1994 Consent Order #94-102, the NJDBI cited N.J.S.A. 17B:30-3 and N.J.A.C. 11:2-23.4 and subsequently fined MetLife $965,555 for MetLife’s practice of misrepresenting life insurance to be retirement or savings plans, particularly in advertisements sent to nurses and other professionals.
  • This action was taken based on the findings of a task force established by the National Association of Insurance Commissioners.  (p27)

1998 - Report of The Metropolitan Life Insurance Companies Located In New York, New York As Of December 31, 1998, By Examiners of The State of New Jersey Department of Banking And Insurance Division of Enforcement And Consumer Protection Market Conduct Examination Unit - 44p

  • Permanent life insurance, the type of policy that offers investment features, combines the death benefit coverage of a term policy with an investment component that can build cash value over time.



  • Kablach - Deposition

Dias v. Nationwide Life Ins. Co., 700 F. Supp. 2d 1204 ... › opinion › dias-v-nation...

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY ... Finally, Plaintiffs admit that they thought of the Policies as an investment and that ...

The Groves <policyholders> cannot establish that they justifiably relied on Foster's <Agent> alleged failure to disclose the primary purpose of the policy.

  • The policy is labeled "Adjustable Life Policy" on the cover page and clearly states, "
  • The purpose of your policy is to provide a death benefit." (See Ex. A at 4.)
  • It does not mention "retirement'' or "college funding" or suggest in any way that it was designed for these other needs. <p27>

1997 - Legal Case - Grove v Principal - Brief In Support of Defendant's Motion to Dismiss the Class Action Complaint - CASE NO. 4-97-CV-70224 (Iowa) - 115p

Q: Let me finish the question. Were you living at your current residence at the time that you purchased the life insurance policy from MetLife?

  • A: I didn’t purchase a life insurance policy.
  • Q: So you are saying you purchased a what?
  • A: A retirement plan.
  • Q: A retirement plan, all right. Now do you recognize that it was a life insurance policy?
  • A: At this time, yes. With the litigation
  • Q: When did you realize that?
  • A: When I received a letter from the State of Florida for -- there was a class action lawsuit.

--  April 8, 2005 Deposition of Darrin Johns (“Johns Dep.”) (attached as Ex. L), at 5:10-6:23. - Case 8:93-cv-01849-SDM Document 382-1 Filed 08/31/2006 Page 12 of 29

20. Directly above Mr. Iannello’s signature on each of these illustrations, he made the following affirmation:

  • Life Insurance is not an investment.
  • I am purchasing an Indexed Universal Life Insurance Policy because I have a long term need for permanent life insurance.
    (See Ex. 2 at pp. 12, 28, 39).



E. Capital Gains Rollover

The small private investor bas fled the securities market in recent

  • Testimony indicated that small business persons who wish to
    raise capital in the public markets are somewhat hampered by the lack of active small investors while small issuers are dependent upon individual investors for equity investment.
  • It was suggested that capital gains rollover may increase the incentive for investing and remaining in a small business by allowing capital gains tax liability from investments in small businesses to be deferred if such gains are reinvested within some prescribed time period in other small business investments.
  • It would provide investors and small business owners an alternative to other types of tax deferral mechanisms such as Keogh plans and life insurance, or so-called tax free exchanges of stock which often result in mergers of small businesses with large corporations.
  • A capital gains rollover provision would have the effect of retaining capital already invested m the small business sector.
    ( See p. 245 for a list of Report recommendations.)  (p199)

1980 - JANUARY 3 - DECEMBER 16 - United States Congressional Serial Set VOL. 25: MISCELLANEOUS REPORTS - 1481p

The fact that the tax benefits afforded cash value life insurance are greatest when the investment aspects are highest shows that the policy reasons underlying the current tax system include clearly the encouragement of savings through life insurance policies.

  • Other tax-preferred investments such as qualified pension plans and individual retirement accounts have significant limitations on the timing and amount of contributions, withdrawals, loans and the like.
  • Comparable financial investment of vehicles without these limitations generally do not receive the tax-free or at least tax-deferred status which is afforded to savings through life insurance.  (p15)

--  John E. Chapoton, Assistant Secretary for Tax Policy, Department of the Treasury

1983 0510, 0511 and 0728 - GOV (House) - Tax Treatment of Life Insurance - [PDF-991p-GooglePlay


  • It might surprise you to know that about 15 percent of retirement savings in America are in cash-value life insurance—that is something that is not often shown in reports. (p31)

--  John W. Mangan, Vice President, State Relations, American Council of Life Insurers (ACLI) 



In its June 7, 1994 Consent Order #94-102, the NJDBI :

  • cited N.J.S.A. 17B:30-3 and N.J.A.C. 11:2-23.4
  • and subsequently fined MetLife $965,555 for MetLife’s practice of misrepresenting life insurance to be retirement or savings plans, particularly in advertisements sent to nurses and other professionals.   (p27)

1998 1231 - Market Conduct Report - REPORT of the METROPOLITAN LIFE INSURANCE COMPANIES  - 44p



Nancy Cannavo thought she had bought a retirement plan from a salesman she could trust.

  • Several months later, in 1993, Cannavo discovered what she'd bought was a life insurance policy that she didn't need.
  • "I thought I was duped and [it was] falsely misrepresented," said Cannavo, a psychiatric nurse from Winchester who complained to Connecticut regulators.
  • She accepts some blame for not reading the policy when it arrived. Cannavo received about $1,000, part of the $10 million in refunds that MetLife made last year to people around the nation who complained about the same retirement sales pitch.

1994 - Hartford Courant Newspaper - Life Insurers Moce to Improve Image Amid Public Skepticism - [link]


2008 0407 - (DoD) - Commercial Solicitation of Military Personnel on DoD Installations - Inspector General Report (Department of Defense) - Report No. D-2008-075 April 7, 2008 -  47p

  • (p1) - Congress found that financial services companies offered members of the Armed Forces high-cost securities and life insurance products and engaged in abusive and misleading sales practices.
    • Such practices included the mutual fund contractual plan and life insurance products being marketed as investments.