Life insurance-based strategies can help you if you’re a business owner, if you’re trying to build a sizable estate, or if you want to help preserve that estate. This report reveals how this versatile tool might work in your wealth plan.
- Life insurance can help provide for loved ones
- It can provide cash to help with liquidity problems
- Certain business-related concerns can be addressed with life insurance
As an investor with significant assets, it’s important to engage in wealth planning that addresses the broad range of your goals, needs and preferences. One of the most versatile and often-used tools in wealth planning efforts is life insurance.
Here’s why – and how you can start thinking about life insurance and whether it should be part of your overall wealth planning strategy.
The importance of wealth planning
To achieve your personal and financial goals you will likely need to engage in wealth planning—a comprehensive planning process designed to address the many (and often disparate and complex) financial issues you face. Wealth planning incorporates state-of-the-art technical expertise with legal strategies and financial products to work together in a synergistic manner based—and this is the key element—around your specific situation.
You can test that idea by asking yourself a few questions:
Do you want to make certain the financial welfare of your loved ones and the causes you care about are properly taken care of if you’re not around?
Do you want to be confident you have the wealth you need (whether it’s for business purposes or in retirement) if you live past 90 or 100 years old?
Do you want to ensure that your business thrives if you lose essential personnel or if an equity partner dies?
If you answered “yes” to any of these questions, you should be using wealth planning.
The aspect of wealth planning that really differentiates it from less comprehensive planning is what we call the human element—which means you take center stage in the process, and any technically brilliant solutions are carefully deployed around your specific situation.
Bottom line: Wealth planning done right is grounded in you and what you most want and need—including what you need and want for the people and institutions you care about most. The legal strategies or financial solutions are never the main focus—the main focus is on you.
Life insurance as a tool of wealth planning
The versatility of life insurance in wealth planning efforts can be compared to a Swiss Army knife. Even the most basic model has many uses and applications – flossing teeth, snipping thread and opening bottles, among them. And like that highly recognizable tool, life insurance can serve multiple purposes and get multiple jobs done – more on that below.
Don’t get us wrong, though: Life insurance isn’t some sort of magic bullet for all financial-related matters, just as a Swiss Army knife isn’t the ideal tool for all jobs (try to butcher a whole chicken with one instead of say, an eight-inch chef’s knife and you’ll get the point!). Life insurance is merely a potentially very formidable tool used as part of your wealth planning – one with enough versatility to serve in a powerful supporting role.
Why, exactly? In general, life insurance is capable of generating three powerful results:
- Liquidity. Upon death, the life insurance policy automatically converts to cash—enabling greater flexibility in estate administration and post-mortem planning, as well as in certain business situations.
- Leverage. With respect to most successful entrepreneurs, the relationship between premium dollars paid and insurance proceeds received often favors the insured. In other words, there is usually more money paid at death than was paid in premiums during life. In some circumstances, there’s the ability to generate tax-advantaged wealth that can be used before death for various purposes (including business needs).
- Certainty. Presuming the life insurance has been properly structured and adjusted and refined (when necessary), the expected benefits will be there when you want or need them.
Now consider a few ways life insurance can be used to help you achieve certain goals and alleviate serious concerns that many investors have. Very often, life insurance is the most assured and cost-effective way for you to provide three outcomes:
- For your loved one and the causes you care about
- Cash to address personal needs or wants in the future
- Money you require to address selected critical business concerns
Let’s look at each reason in depth.
The report is published by VFO Inner Circle, a global financial concierge group I have on retainer to keep me up to date on the latest research and strategies for addressing the key concerns of successful people like you.
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