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Wealth Building Strategies Your Advisor Didn’t Share With You

Many people don’t know (and probably don’t care) that September is Life Insurance Awareness Month. It’s the one month out of the year that life insurance gets it’s time in the sun. To pump up this incredible product, I want to share some alternate uses for life insurance that many advisors never share with their clients.

1. The Roth Alternative

The “Roth” IRA was created back in 1997 and it was setup to provide an individual with tax-free money during their retirement years. Other employer-sponsored retirement plans (401k, 403b, 457b, etc.) also adopted the Roth feature. Currently, if you have an IRA or employer-sponsored retirement plan that has “Roth” in front of it, you’re telling the IRS to tax the money that’s currently being contributed into that account. And, if you follow a few simple rules, you can receive your distributions tax-free during retirement.

There were only two problems with the Roth IRA specifically: 1) if you earn too much money, you are not allowed to open one and 2) the contribution amounts are limited (2020 limits – $6,000 if you’re under age 50, $7,000 if you’re 50 and over). Income limits don’t apply to the employer-sponsored plans and the contributions limits are higher than an IRA but they still have a cap.

With these problems known, people began to search for another way to invest their money for retirement with the hopes of receiving tax-free money during their retirement years. The solution – a properly structured permanent life insurance policy.

2. Create Your Own “Bank”

For starters, you will not have to concern yourself with setting up a physical (or online) financial institution. Also, for the sake of keeping things simple, this strategy involves you utilizing a properly structured permanent life insurance policy. Here are the primary reasons people consider creating their own “bank” or what some call the “family bank”:

  1. The cash value usually earns a much better growth rate than any solution you would find at your financial institution (High-yield savings/checking or CD’s).
  2. The growth, as well as distributions you take, are not taxed as long as a small amount of death benefit stays in force until you pass away
  3. When you borrow money, your full cash value continues to grow inside the policy despite any loans you have against the policy

For each of the alternate uses of life insurance I’ve shared with you, I highly recommend that you speak with a financial advisor or insurance agent. These strategies are not typically shared with the general public. So, once you do connect with a financial advisor or agent, you will now be equipped with some good material to discuss at your next appointment.

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