Hello;
Here are some reasons why permanent life insurance is very valuable:
Provides liquidity when it's needed. If you're primarily invested in real estate, a private company, or other illiquid assets, where's the cash going to come from to pay taxes owing when you're gone? Life insurance can solve the problem.
Provides income when you can't. Are you the primary bread-winner in the family? If you're no longer around, life insurance can create an investment portfolio to replace that income that may be important to the security of your family.
Shelters investments from tax. If you own a permanent life insurance policy, then a portion of your premiums will go into an accumulating pool of cash to create cash value inside of your policy. That cash value will grow tax-sheltered, which can allow for greater accumulation over time.
Eliminates debt at an important time. If you have debt, do your loved ones a huge favor and provide them with greater financial security by paying off your debt with life insurance proceeds when you're gone.
Transfer assets tax-free. When life insurance pays out upon death, both the face value of the policy and the accumulating value are paid tax-free to your beneficiaries. If you decide to invest outside of a life insurance policy, the growth on these investments will be taxed upon your death (when someone other than your spouse inherits the assets). So, life insurance can eliminate that tax.
Leaves a legacy of value. Some clients have purchased life insurance on the lives of their children - because it's cheaper than on their own lives. Once the kids are 18 or older, they can transfer ownership of those policies - including the assets in the policy and all the growth - to their kids, free of tax. The beneficiary of the policy can be the grandkids. This provides a tax-free legacy for future generations.
Provides cash in retirement. You don't have to die for the benefits of life insurance to be realized. As you accumulate cash value inside a policy, it can be used to provide cash in retirement. You can make direct withdrawals from the policy (which are taxable) or you can borrow against the value accumulated in the policy. These loans can be used to meet cash needs in retirement, and are paid off using some of the insurance proceeds when you're gone.
Equalizes an estate for your heirs. What are you going to leave the kids when you're gone? Are you leaving assets of equal value to each of them? If you'd like to treat them equally but are leaving certain assets of value to one and not others, life insurance can be used to provide cash to equalize things.
Helps to make meaningful donations. If you have a desire to help a specific charity or cause, and want to do more than your cash flow or assets will allow today, consider making a donation after you're gone using the proceeds of a life insurance policy.
If you require further information, please feel free to reach us.
Sincerely,
Mike Busby
