The technical purpose of any insurance contract is to make life financially whole again after an unexpected loss. We are required by law to get health insurance (the Affordable Care Act) and we are also required by law to get auto insurance. For both insurance cases, harsh penalties and taxes can ensue if you’re not covered. But why do you need whole life insurance?
Most people look at whole life insurance as only death insurance—a death benefit claim is paid out at the death of the insured. That’s true, whole life insurance offers a death benefit, but it also offers living benefits that most people are unaware even existed. Why do so many people fail to insure their most valuable skill—their ability to generate income? While you’re living, whole life insurance can provide the opportunity to receive tax benefits, an ample retirement income, and build secure wealth.
Do You Need Whole Life Insurance?
So who really needs to buy a permanent life insurance policy? The truth may surprise you. Read our reasons below:
- People who are looking for protection from market risk
Life insurance contracts are protected against the downside of the stock market. Even in the worst economic times our country has seen, policy holders were protected. You need whole life insurance to provide security you can’t find on Wall Street.
- People who want to protect their assets from law suits and creditors
As a privately held contract between you and the insurance company, life insurance contracts are not public information. Most states have state-specific protection against lawsuits and creditors. You need whole life insurance to help protect your assets.
- People who want capital that is completely under their control
As the owner of the life insurance contract, you have first rights to your policy’s cash value. These funds become available to you when and how you’d like to use them. No questions asked. You need whole life insurance to become your own bank.
- People who want to provide a legacy of wealth after they have passed
This is where we’d mention the death benefit. As the owner of your policy, you have the right to stipulate exactly how your death benefit proceeds are spent. So even in death, you control your money.
- People who are looking for tax-free growth of their wealth
The money inside of your non-mec policy is not reported to the IRS and therefore grows tax free each year. Whole life insurance offers a variety of tax advantages.
- People who want to distribute their wealth tax-free at their passing
Since death benefit proceeds are considered an inheritance rather than an income, they are not subject to income tax. With careful estate planning by a qualified estate planning attorney, you can ensure that your death benefit proceeds also remain tax free at your passing as well.
At Paradigm Life we teach our clients how to leverage the living benefits of a permanent life insurance contract, making whole life insurance a necessity for everyone. Obviously, the death benefit is protected under the contract, but life insurance is so much more than just a death benefit, it’s for you, while you’re still living.
Read: The Whole Truth About Whole Life
Watch: Getting Ready to Retire at Any Age