Ironically, when many people hear the words “life insurance,” they often think of death and how a life insurance policy can financially protect their loved ones. While term life insurance is just that – a death benefit – whole life insurance is much more. Whole life insurance is an asset that comes with many living benefits that are advantageous for the policy owner while he or she is still alive. In fact, these living benefits may make the policy far more valuable than just a death benefit.
Life insurance can seem convoluted and difficult to understand – both term and whole life. So, it’s no surprise when whole life insurance is overlooked as a viable, lucrative investment option.
Here are a few reasons that whole life insurance may not be what you think it is:
Learn The Truth
- It’s not just death insurance
The value of “death” insurance can only be accessed at, well, the time of death. But whole life insurance is much more than “death” insurance. It offers specific benefits to the policyholder during life that are at the heart of wealth-building. And when these benefits are used correctly, a whole life insurance policy also continues to provide all of the death insurance benefits that we traditionally think of when we think about life insurance.
- It’s not just for corporations and the ultra-wealthy
Banks, corporations, and the ultra-wealthy invest heavily in whole life insurance. They have done so consistently for many decades, 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 too can reap with a properly structured whole life policy.
- Your investment is safe and secure
Whole life insurance is one of the oldest, most stable types of investments on the market. It’s insulated from the incredible volatility of the financial markets, and it’s a tightly regulated industry – more tightly regulated than Wall Street, in fact – better protecting your money.
- It’s really an asset, not an investment
Whole life insurance may be technically referred to as an investment, but the reality is that it’s more of an asset than an investment. When structured correctly, investors can access the full cash value of their whole life insurance premiums from Day 1, using it to purchase more whole life insurance or make other investments. That’s right – even while you continue to own a whole life insurance policy, you can treat the premium’s cash value as your own private bank from which to draw liquid cash.
- You aren’t giving up steady dividend payments
The average investor has come to expect that their investments in stocks, mutual funds and so forth will pay a dividend, at least during strong years. Whole life insurance does too, and because the industry is so stable, these dividends are guaranteed. New York Life, for instance, paid dividends during the Great Depression. You can apply your annual dividends to your premium payment to offset your out-of-pocket cost, or roll it back into your policy to add more cash value (and death benefit) to the policy.
- You are not paying full taxes on earnings
The IRS does not consider whole life insurance dividends to be earned income, but rather a return of your premium, which means with a properly structured policy dividends are not automatically taxed.
When utilized correctly, whole life insurance can be an asset that builds cash value, gives you more financial freedom, and puts you on a wealth-building path. Whole life insurance absolutely isn’t what you think it is – it’s not just death insurance, it has living benefits that you can use throughout your life in addition to providing for the financial security of your family.
Want to learn how to protect your life insurance policy?
At Paradigm Life we can customize a policy to fit your financial situation. Our expert Wealth Strategists are available to answer your questions and show you customized illustrations, outlining an individual plan of action to help you achieve your goals. , no strings attached.