Whole Life Insurance -- So Much More Than You Think
When most people think of life insurance they automatically think that it’s just a death benefit. This is understandable because for decades, this is the way that life insurance was marketed to the public, was as death benefit policies. But in reality, it is SO much more than that. It's a tool that like a Swiss Army knife, has many options and ways that you can utilize it to help you solve a problem that you have, or fulfill a need. It's not a one trick pony.
There are different types of life insurance policies out there. (see LIFE 101) What kind you need depends on what you’re trying to accomplish. But if you’re wanting a powerhouse of a product that can do double, triple, or quadruple duty for you, and give you benefits that you can enjoy while you’re alive as well as provide a death benefit, then you’ll want to take a look at whole life insurance.
Life insurance can seem very convoluted and confusing . . . if you don’t have a good agent who can simplify it for you. Because it can be a confusing subject for many people, it’s not very surprising when it is often overlooked as a viable, lucrative investment option. Want to know a few of the reasons why Whole Life may not be what you think it is? Here they are:
It's not just for corporations or the uber-wealthy
Banks, corporations and the uber-wealthy invest heavily in whole life insurance, and they have for over a century. This is because they understand that it’s a secure place to grow wealth that offers liquidity, reliable cash paying dividends, and a hedge against inflation. These are all wealth building benefits you can reap with a properly structured whole life policy.
It’s not just a death benefit
A death benefit is something we always associate with life insurance. But whole life insurance can provide that and so much more. It offers specific benefits to the policyholder during their life (also known as “living benefits”) that are at the heart of wealth building. When these benefits are used correctly, a whole life insurance policy will also continue to provide the death benefit that we traditionally think of when we think about life insurance.
Your investment is safe and secure
Whole life insurance is one of the oldest, most stable types of investments on the market. It’s protected from the immense volatility of the financial markets and it’s heavily regulated. Even more so than Wall Street, which means your money is better protected. It is the only product that guarantees the growth on your money. Another perk? Banks and other institutions see it as an asset when looking at applications for a mortgage or loan.
It’s not just an investment, but an asset
When structured correctly, investors can access the full cash value of their whole life insurance premiums from Day 1, using it to purchase additional whole life insurance, or make other investments. Yes, you read that right! Even while you continue to own a whole life insurance policy, you can treat the policy’s cash value as your own private bank from which you can access cash.
You don’t have to give up policy dividends
The average investor expects that their traditional investments will pay a dividend, at least during strong years. With whole life insurance you have a solid history of dividend payments, and because this industry is so stable, they’re guaranteed. New York Life for instance even paid out dividends during the Great Depression! You even have options on what you do with the dividends . . . you can apply them to your premium payments to offset your out of pocket cost, or roll them back into your policy to add more cash value to the policy (which will also boost your death benefit amount).
You are not paying full taxes on earnings
The IRS does not consider whole life insurance dividends to be earned income, but instead a return of your premium. This means that if the policy is structured correctly, dividends are not automatically taxed.
Whole life insurance policies are powerhouse products that can be structured and built to fulfill a whole variety of objectives for you. When utilized correctly it’s an asset that builds cash value, gives you more financial freedom, and puts you on a path to building wealth. It has so many more capabilities than most people realize and take advantage of. It has living benefits that can be used throughout your life while it doubles as being the financial protection that your family needs, and yes . . . also a death benefit.
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