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Combined insurance and investment products confuse personal financial planning decisions
In recent years, insurance firms have expanded their products and services from offering only pure insurance to selling hybrid products that combine insurance and investment characteristics. The industry also has garnered certain tax treatments that can make their products more appealing to persons with particular tax situations.
Unfortunately, some of these hybrid insurance/investment products are characterized by inferior returns, high costs, unwanted tax implications, significant insured risk limitations, and other problems. Ultimately, the issue that the potential buyer must sort through is whether the purchase of separate insurance-only and investment-only products will yield better insurance risk reduction and/or superior risk-adjusted investment performance.
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