Using Universal Life Insurance to Make Up for Financial Losses or Missed Opportunities

Most people in the tech world know the story of Ron Wayne. He was one of the early founders of Apple, but unfortunately for Wayne, he sold out early. He sold his 10% share of Apple in 1976 for about $800. Today, that 10% value is worth about $40 billion.

While most of us won’t miss an opportunity that big in our lifetimes, chances are, we’ve missed more than a few opportunities to significantly expand our wealth. Just because you’ve missed a few opportunities, though, doesn’t mean you’ve missed out on the chance to create a legacy for your heirs. Leveraging life insurance can help to make up for those missed opportunities and allow you to create a fortune for your heirs, even if you weren’t able to create one in life.

How Much Does a Legacy Really Cost?

The total lifetime spending of the average person is about $3 million. This is just the average that someone spends leveraging debt, making car payments, buying a house, paying student loans, and so on. So even if you do relatively well over your lifetime, if you’re like most people, it’s pretty unlikely that you’ll be able to leave a significant legacy for your family.

Leaving a substantial inheritance can be especially difficult if you haven’t amassed as much wealth as you’d like in your lifetime. While your own personal needs might have been met, there’s a very strong chance that you’re not leaving behind as much as you think you are.

Some might say that you have to choose between living rich and dying poor or living poor and dying rich, but that’s not always the case. By using life insurance correctly, you can create more wealth after your death than you ever had in life.

How Universal Life Insurance Can Build the Wealth You Couldn’t

There are a lot of options for people looking for life insurance to pass on wealth to their families. One of the first options many people consider is term life insurance. People without a lot of wealth might choose to focus on term life insurance because it’s the cheapest and covers specific, limited insurance needs very well. However, to make the most out of a life insurance legacy plan, a more permanent plan like universal life (UL) insurance is probably the better way to go. UL allows you to build wealth for your family and favorite charities through a long-duration death benefit, while at the same time ensuring you can get money back if you need it.

UL insurance is a form of permanent life insurance. Unlike whole life insurance, UL insurance allows you to adjust your payments, death benefits, and cash return to meet changing needs. The flexibility of a UL policy really puts the owner in control so that the policy provides coverage as long as needed, at a premium and cash value that are suitable for the client. The policy can be overfunded to provide tax-free loans and provide future withdrawal income, or simply provide the least expensive permanent coverage available. Loan proceeds can be repaid along the way or at the time of death through an adjustment to the death benefit.

UL insurance avoids the short-lived protection benefits of term life insurance without the unnecessarily high cost of a participating whole life policy that overcharges you initially only to return any excess premium that was charged as a dividend. And, of course, dividends are not guaranteed. In addition, you can structure a UL policy with either a level or increasing death benefit based on your needs. If cash accumulation is a major focus, a level death benefit may just be perfect. If you want interest earned to raise the tax-free death benefit then you may be wiser to elect an increasing death benefit option. Either way, you are in control.

Leveraging Cash Value for New Opportunities

With UL, you can leverage the cash value of the policy while you’re still alive to create wealth now, even if you missed the opportunity earlier. It’s possible to take out loans for anything from real estate investing to starting a business to private lending and more. These loans are made tax free providing the policy was properly structured so that you can accomplish a lot more with less.

This is even possible when holding the policy in a trust, though the process will require a few more steps. Generally, people hold policies in an irrevocable trust if they believe their estate is going to exceed the existing estate tax exemption. If you’re using the policy to accumulate wealth now, it might be wise to ask us about the different forms of ownership and their advantages and disadvantages.  

Just because you missed a few opportunities in life doesn’t mean you have to miss out on providing a legacy for your heirs or even taking advantage of new opportunities now. A properly designed and structured UL insurance program can help you create wealth for both your future as well as for your legacy. Contact a Howard Kaye advisor by calling 800-DIE-RICH to see how UL insurance might just be the opportunity you’ve been looking for to leave a legacy.  

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