“Rich people stay rich by living like they’re broke. Broke people stay broke by living like they’re rich.” — Dave Ramsey
We either love or hate them, there are few who don’t really care, but let’s admit it… some rich people are fascinating. As such, millions want to hear, read, and watch them fueled by shows like Dynasty, The Real Housewives and Keeping Up with the Kardashians to following celebrities and socialites on Instagram. Do we secretly want to be them? — it’s ultimately something many aspire for.
So, here’s a peek on the reasons why the wealthy do what they do — particularly buy lots of life insurance.
- Tax laws favor life insurance — the proceeds of life insurance are tax-free to the beneficiary allowing for the rich to protect their assets. For tax planning and strategy, talk to a tax advisor or an accountant.
- For family businesses, a key-person insurance policy can fund a buy/sell agreement in the event that the owner dies unexpectedly. This keeps the business from going under should the founder/owner or managing partner pass on before finding a replacement. Additionally, the premiums of these types of insurance usually can be deductible as a business expense.
- Life insurance as an asset — some types of insurance have a cash value. So, when the life insurance is no longer needed, it can be sold to a third party for a one-time cash payment. Also, life insurance with a savings component in which cash value may accumulate and can offer dividends. The cash value in the policy also builds up and can be used as your own private bank for a variety of income-producing activities.
- Living benefits in life insurance provides medical protection. In case the insured becomes ill or injured they get access to the cash value of the policy to use for whatever reason they choose.
- Life insurance to cover for estate taxes — this can provide the heirs with the liquidity they need to pay the taxes without the need to sell the property. It’s best to speak to a tax advisor on how this applies to your particular situation.
- Finally, with whole life insurance, the death benefit is guaranteed regardless of the insured future health. This is important long-term security for the policy owner’s family and heirs.
Take these wealthy people tactics and personalize them to get to your financial goals. More importantly, talk to an independent life insurance agent and financial advisor to learn more smart life insurance strategies.
Call us at (714) 729–3616 or email us at info@susyzinn.com for a free review of your insurance policy.
