I was told by an insurance agent that I should buy cash value insurance to create some forced savings. Is that a good way to accumulate some savings?
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UPDATED: Sep 15, 2020
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If you have difficulty saving any money it could be a way to accumulate a small “nest egg.” But for many people, a better way to save would be to carefully budget your spending and allocate a portion of your money to a bank savings account or some other form of investment. By keeping your life insurance and your savings separate, you will probably do better with both.
While there are people with no savings who have accumulated cash value in some life insurance policies, you should consider that while insurance will provide an instant fund for your beneficiaries, it could have some disadvantages as a savings vehicle.
The cash value is generally much less than the money you contribute until you have paid premiums over a few years. Therefore, it could be a long time before you earn an amount that is greater than your contributions.