by: Teresa Kuhn JD, RFC
“Now you’re up against the two biggest risks to your money – tax risk and investment risk (investment risk meaning stock market risk). Nobody wants those two nooses around their neck, especially going into retirement. Insurance is the kind of product where you can eliminate the taxes and the investment risk. So to me, that is essential for anybody who wants to sleep at night. I don’t know of any other product that attacks both risks at once.”
– Ed Slott, CPA ‘America’s IRA Expert’
It’s hard for me to imagine how any financial advisor who truly understands the different phases of a person’s financial life can ignore the value of life insurance as an integral part of a wealth preservation strategy.
Yet, there seem to be many advisors out there that either don’t understand the difference between investing and saving, or who are so dead set against permanent life insurance that they ignore it’s obvious advantages, to the detriment of their clients.
The financial media isn’t much help either as they continue to promote the largely discredited theory that everyone should “buy term and invest the difference.”
Here are just a few reasons I choose to help my clients build their financial futures using the power of specially-designed, dividend-paying whole life insurance,
1.) Using life insurance leverages your money and creates wealth.
In the long run, life insurance has the power to create more wealth than any other financial tool available to the average person. This wealth ends up being more valuable than tax deferred retirement savings , which is at risk of being taxed at high rates in the future.
The leveraging power of life insurance means that one dollar put into a permanent life policy can become many more dollars that are tax free.
Is Wall Street or your bank able to do the same?
2.) Life insurance is a good asset
‘America’s IRA Expert’, CPA , author, and PBS host Ed Slott, says that insurance is a good asset. He explains that while most people with retirement savings have them in 401(k)s and IRAs, they don’t realize the vulnerability of this money when it is needed most, in retirement. For example, funds in an IRA, distributions are not only taxable (in a traditional IRA), but the increased income they create could also trigger hidden or ‘stealth’ taxes. These taxes include phased-out deductions, exemptions, and tax credits.
For example, an income increase from an IRA distribution could cause more Social Security benefits to be taxable or the trigger the 3.8 percent additional tax on net investment income from capital gains, interest and dividends. These are some of the reasons that Slott says traditional retirement accounts are uncertain and diminishing assets over time and recommends replacing such accounts with permanent life insurance using systematic IRA withdrawals.
Wouldn’t you like to enjoy a better and more powerful long term asset?
3.) Life insurance can help reduce stock market risk
Depending on how your policy is designed, permanent life insurance can build a wall of protection around your savings that prevents the erosion of your cash due to stock market volatility. The closer a person gets to retirement age, the less likely it is that he or she will be able to replace lost wealth. Most people will never be able to replace lost money unless they win the lottery or get a surprise inheritance.
How much money can YOU afford to lose?
4.) Life insurance keeps you from being forced to play by other peoples’ rules
There is a measure of control afforded to those who choose life insurance as the ultimate savings vehicle. For example, IRAs (except for Roth IRAs, under current tax law) are subject to annual required minimum distributions after age 70 ½, whether you need that money or not. This creates forced distributions and additional taxes when you need them least.
5.) Life insurance helps you safeguard against unexpected losses
Many of us plan to ‘work until we die’. While that might be an admirable goal, reality has a way of upsetting our plans. Even the most well-planned and prudent person can suddenly be faced with a health crisis that forces them to retire sooner than planned. Having a ‘turbocharged’ life insurance policy, such as the ones I design for my Bank On Yourself clients, can make a huge difference in your quality of life should you be faced with a health emergency.
My career as a financial strategist has exposed me to every flavor of investment and savings tool available. After researching all of these, I continue to recommend that my clients build their financial homes on the solid foundation provided by permanent life insurance policies.
If you, or someone you know, could benefit from having greater financial peace of mind, call my office today at 1-800-382-0830. I’ll send you all the information you need to discover how to create a financial future that is less stressful and more satisfying.