MoneyGeek: “401(k) vs. Life Insurance: Which One Is Better for Retirement?”
MoneyGeek, Oct. 9, 2023 — Both life insurance and a 401(k) can serve as investment tools. Determining which is the better choice for you will depend on your long-term goals. Because they serve different purposes, you may be interested in both.
A 401(k) plan is better for retirement planning. Because it’s designed for retirement, the returns are typically better and will benefit you once you end your working career. Life insurance, on the other hand, is better for estate planning because it’s focused on the death benefits that your loved ones will receive if you pass away.
Although some types of life insurance have a savings portion, that is only a bonus, and investment returns aren’t very good. In most cases, including variable life insurance, returns aren’t even guaranteed.