Placing Extra Cash in Your Life Insurance Policy
May 10th, 2010 // 4:00 am @ Andrew Rosenbaum
In the current economic environment, it is difficult to produce a significant return from conventional financial products that offer safety, such as savings accounts and certificates of deposit.
But if you own a whole life insurance policy, you may be able to deposit money using your life insurance contract and gain two important things:
- A return from dividends*, as well as guaranteed cash values that grow tax-deferred each year.
- An ability to leverage your death benefit, because in most situations, every additional dollar added may produce an additional $3 in your death benefit. That gives you an opportunity to create more of a legacy and pass along more income tax-free money to your heirs.
Basically, you’re getting your money to do more than one job.
It will both generate a higher return than what’s available from most financial products today, and significantly enhance your death benefit.
It’s a sensible and secure long-term growth vehicle for extra cash that can be set aside for several years.
So if you’ve worked hard and saved money that you can afford to sit for a while, discuss this option with your financial representative.
*Dividends are not guaranteed and are declared annually by the company’s Board of Directors.
Category : Accumulation v. Utilization &Family &Market Volatility &Recession &Taxes
Spending Year-End Bonuses Wisely
April 19th, 2010 // 7:02 am @ Andrew Rosenbaum
It’s Wall Street bonus time, and the big surprise is what is on so many bankers’ shopping lists: whole life insurance.
After last year’s economic freefall, it’s not just Main Street investors seeking safer financial products; Wall Street players are adding whole life products to their portfolios.
And many of them are using guaranteed financial products to balance portfolio risk.
They’ve seen how other investors protected their wealth with products such as whole life insurance when the economy sank.
Sophisticated investors have begun to question the common belief, “Buy term and invest the rest.”
They see it is a misconception, because (1) most people don’t invest the rest, they spend it, or (2) they invest it in something that they think will produce a high return, but that is more like gambling than investing.
Bonus time is a great time to invest in your economic security.
Consider taking part of your bonus and putting it toward guaranteed financial products that will weather the storm, whether markets go up or down.
Category : Financial Risk &Investing &Life Insurance &Market Volatility &Permanent Insurance &Recession
Whole Life: A Surprising Source of Cash When Times are Tough
December 16th, 2009 // 3:58 am @ Andrew Rosenbaum
This past September, the Wall Street Journal printed a special section entitled “The Resurgence of Whole Life Insurance.”
Many more people are considering whole life insurance these days because it’s one of the few assets that has retained its value during the economic downturn.
It’s interesting that the WSJ focused on a little-known advantage to this great life insurance product –- a benefit you should know about if you’re a business owner.
If your business runs short on cash –- and most businesses are suffering from a cash crunch in this recession –- you can borrow against a whole life policy without incurring the onerous fees and penalties of borrowing against traditional retirement accounts.
To quote the article,
Whole life, or permanent life, as it is also called, is experiencing a revival of interest as a long-term investment to weather difficult economic times. Aside from the death benefit, the insurance provides a tax-deferred buildup of cash value that can be borrowed against on a tax-favorable basis, providing a ready source of capital when other sources of money are problematic or hard to come by.”
Whole life has both a “living” and a death benefit. You can assess the accrued cash value of a whole life policy at any time.
I’ve seen how useful this can be. The cash helped one of my clients through a business downturn.
The whole life policy he had purchased years ago had built up a considerable amount of cash. He was able to withdraw a part of the cash value at no penalty.
Because he withdrew the money personally, it didn’t affect the credit rating of his business. Although he repaid the loan, the fact is he didn’t have to. The amount one withdraws from a policy can be deducted from the policy’s payout.
The bottom line is this: A whole life insurance policy that has been given a chance to grow is an asset that’s “got your back” if you need it.
If you’d like to read the entire Wall Street Journal section, please contact me and I’ll send you a copy.
Category : Business Planning &Life Insurance &Permanent Insurance &Recession
