The wealthy continue to use this financial vehicle year after year to protect and grow their money. The good news is you have it available to you as well. The greatest wealth accumulation vehicle is: life insurance. Not only life insurance, but Permanent Cash Value Life Insurance.
Some of you are likely scratching your head right now wondering how life insurance can be used to build wealth. To comprehend this, we need to go over how life insurance is structured.
There is a minimum amount of life insurance that you and I can buy. Who do you think sets that minimum line? It’s the insurance companies. And it’s to no surprise. Insurance companies have actuaries that calculate the minimal amount needed to deliver on their promises.
But who do you think determines the maximum amount of money that one can put into an insurance contract? The answer is the government (IRS). Now, why would the government limit you to how much money you can put in? It has to be good, doesn’t it?
Let’s use an example of $500,000. If you were to purchase a life insurance policy in the amount of $500,000 and have two options to pay for it: (1) you can pay $500 for it or (2) you can pay $10,000 for it, which would you choose?
Why wouldn’t you choose to pay $500 for it? Everyone wants to feel like they’re getting a deal, right? The takeaway here is you actually want to pay $10,000 for it. Why? Because when you pay at the minimum line ($500 in this example), you only receive one benefit. And that is a death benefit. This minimum purchase is also called term insurance. If something should happen to you, your family is protected. When you pay up to that maximum line ($10,000 in this example), you begin to receive a myriad of benefits. Benefits such as tax-deferred growth on the inside cash accumulation, tax-free income distribution that can be used for retirement income, vacations, college funding, weddings, and more, and tax-free wealth transfers to your heirs. This is the power of Permanent Cash Value Life Insurance. insurance and this is what the wealthy are using to protect and grow their money.
In-between the minimum and maximum lines of life insurance, there are several financial products to choose from. All of them can be classified into term or permanent life insurance. Products such as Whole Life (WL), Guarantee Universal Life (GUL), and Indexed Universal Life (IUL).
The best financial vehicle the wealthy have been using for the past decades and continue to use is IUL. I'd like to use the car analogy, there have been many options to choose from throughout the years, but the IUL is the Ferrari with all of the bells and whistles!
The benefits of IUL are most aligned with what you would look for in a wealth accumulation vehicle. Benefits including: no risk, guarantees, liquidity, use, & control, protection, leverage, tax-deferred growth, tax-free income, collateral, disability benefit, and tax-free wealth transfers.
Two powerful abilities of IUL that the wealthy use most are: (1) collateralization and arbitrage and (2) capturing the gains of the stock market, yet never experiencing the downside losses (i.e. - protection from the stock market). We’ll be covering each one of these abilities in our video series at www.provenwealthstrategies.com/pwg.