The role of life insurance for individuals and families have changed, and the demographic of policy holders has evolved. Previous generations grew accustomed to purchasing Life Insurance after or before major life events; such as, getting married, starting a family, or when one’s retirement years were approaching. However, Whole Life Insurance (also known as Permanent Life Insurance) is no longer limited to providing benefits to dependents post-mortem. Banks and businesses and some wealthy Americans have been doing it for centuries – most main street Americans have not.
You might be thinking, “I can increase my personal wealth through purchasing a Whole Life Insurance policy, how?” The answer is yes, yes you can.
Purchasing Whole Life Insurance as a conduit of wealth is extremely practical and sensible. Regardless of your stage in life, this strategy is appropriate for you. Here are three top reasons why Whole Life Insurance can build wealth early on in life and can be a profitable venture even now.
You Are Paying Yourself
Known as overfunding, an overfunded policy is one where the policy holder’s premium is available in cash value, as much as possible. One can increase the amount paid into a Whole Life Policy to have available for when any financial need arises. Overfunding a policy can be completed by increasing one’s annual premium payments, or making a lump sum premium payment.
The additional money that is paid toward the policy’s premium still belongs to the policy holder. The policy can be used for the traditional death benefit, but it is not limited to this. The policy can be utilized earlier for any financial reason. This is available with a Whole Life policy, as loan payments made become immediately available to the policy holder for future loans.
Save For a Rainy Day
You have been laid off, but the bills still need to be paid; definitely a rainy day. No need to worry, you have your Whole Life Insurance policy, ready and available to provide you the cash flow to get you through the unexpected.
It gets even better. Did you know that under most circumstances the policy holder can borrow against the policy tax free?
Also noteworthy, the death benefit paid to heirs from a Whole Life Insurance Policy is also tax free. Since the IRS considers death benefit proceeds to be inheritance and not income; death benefit proceeds are passed to an estate tax free. Regarding the estate tax, with careful estate planning, death benefit proceeds are also not subject to the estate tax calculation.
It is a valuable asset
To obtain wealth one must have available assets. However, not everyone has the ability to have assets such as a reserve of cash or even tangible things to consider. A Whole Life Insurance Policy changes this. Owning a Whole Life Insurance policy is one of the most secure and wealth building assets available.
The knowledge that one’s money is secure should a life event occur, even in the short-term, is priceless. The options that are afforded to the policy holder in a Whole Life Insurance policy is just that; an asset to one’s financial security in the short and long term. Whole Life Insurance is truly insurance for life.
Read: The Whole Truth about Whole Life
Watch: Access Your Savings Tax Free
Listen: Human Life vs Capital Value