See Life Insurance as an Investment Alternative

What if we told you that you could buy dollar bills at a discount? How many would you buy? Maybe $1 million? Maybe $5 million? You’d probably buy as many dollars as you could afford. Well, we want to show you that life insurance is just that: money. Developing a life insurance strategy today will help you efficiently transfer guaranteed, tax-free cash along to your heirs in the future. We want you to view life insurance as not only an asset within your overall portfolio but also as an investment alternative—one that helps you stay diversified.

So why do we invest? Most of us want to grow and preserve our assets so that we can retire comfortably, create a legacy for our heirs, and perhaps support charity. Many of us try to achieve these goals by investing in stocks and bonds, and possibly owning real estate. Here are some of the reasons you should be incorporating life insurance into your portfolio as well:

It offers the ability to leverage your money. When you buy permanent life insurance, you are paying a discounted price today to buy money in the future. For example, a healthy 65-year-old may pay $300,000 today so that her kids will receive $1 million upon her passing. When you buy life insurance inside of a properly structured trust, you can accomplish even more: The money you put in will reduce the size of your estate, and the eventual death benefit will be passed to your heirs income and estate tax-free. 

The death benefit is often fixed and guaranteed. There is a lot of value to the word “guarantee.” How often do you buy an investment and know exactly what your return will be in the future? Not often. Take your stock portfolio as an example. History may tell you that you’ll average a 6% or 7% return each year, but that’s really not how it works. Some years, you’ll be up 10%, some years, you’ll be down 30%. You need a strong stomach, good timing, and the ability to tolerate lots of risk if you’re going to invest in stocks. Life insurance eliminates this undesirable aspect of investing because it tells you exactly how much future money you are buying with today’s dollars. 

Life insurance policies have the ability to generate tax-free cash in the future. There are various ways you can access the money inside your life insurance policy. Many people don’t tap it at all and simply pass the proceeds along upon their death. However, policies that have been in force for many years can be borrowed against, creating a tax-free stream of income that can be used for retirement, paying college costs, or anything else. There are some guidelines provided by the IRS, so please ask us about how you can enjoy tax-free income in the future. 

At Howard Kaye, our goal is to show you how to build and preserve your wealth. We think you should have a diverse portfolio that includes all sorts of assets. But we also want you to understand the incredible efficiency that a life insurance strategy can create within your estate plan. Contact us today at 800-DIE-RICH to learn more.