By Monica Weissman, CFP, CIM
All these insurance companies do not do anything else than ripping you off and using your money for their own benefit. You would be better off by just paying with your own savings if and when something unexpected happens – this is how the popular belief goes.
But, is this the truth or is this a myth?
When you reached a certain level of financial security, you might consider one of two opposite approach: NO insurance (because I have enough money to mitigate any unexpected adverse event), or LOTS of insurance (because no matter how much money I have, I do not want it wasted by mitigating unexpected adverse events). Life insurance is most often looked upon as a vehicle to protect loved ones, family or business, wellbeing, lifestyle or continuation, but, the question arises – given their wealth, why would rich individuals need life insurance?
“Life insurance is an efficient way to transfer money to your heirs.” – said Malcom Forbes.
In fact, most of the time insurance is faster than any other investments, no matter what investment strategy is used. When allocating your investment dollars, it is helpful to understand what investments have the highest exposure to income tax. Investments are all exposed to taxation, in various degrees, depending on the tax payer’s situation. Paying a fair amount of tax and not more, is as much an art as it is a science, that is why we pay highly for the knowledge of skilled professionals expertise when we file our tax returns.
Maybe our hate relationship with life insurance will change if and when we will look at Life Insurance as an Investment:
Reducing the portion of the estate which is lost to the government to pay taxes at death is a major focus in Estate Planning. The advantages of using life insurance for anyone who will have taxes or other liquidity needs at death are easy to understand.
As Malcolm Forbes alluded to, for providing capital to protect your family’s future financial security, paying taxes at death and creating a charitable legacy, nothing is more efficient or effective than life insurance.
To grow your wealth – plan for it!
You don’t have to do it alone – use the complimentary offers of trusted professionals to create a roadmap Financial Plan and get to your desired destination, fast and safe.