How Can Life Insurance Be An Investment? 
If by `` investment '' , you mean something that may gain or lose value , then the only type of life insurance that I would consider an investment is Variable Universal Life -LRB- VUL -RRB- . The interest credited to a VUL policy is based on stocks & bonds and may be positive or negative for the year . There are other types of life insurance that can accumulate cash called whole life and universal life policies . I consider these savings vehicles rather than investment vehicles because they do not lose money due to a decrease in the stock market or index . Whole Life insurance accumulates cash by dividends that are declared by the life insurance company . Universal life , other than VUL , comes in a fixed and an indexed universal life option . The Fixed UL earns interest based on a rate declared by the insurance company . The Indexed option -LRB- IUL -RRB- earns interest based on the performance of an index such as the S & P. With an IUL , there is usually a floor of 0 - 2 % that protects the cash value if the index is negative . The nice thing about an IUL is that you participate in the upside of the market without the downside risk . These are complex products and it is important to speak with a knowledgeable advisor who can educate you on the fees and other particulars . 