6 Other Uses for Life Insurance

Lifestyle, Business

 

When you talk about generational wealth, life insurance is the first building block. Why is that? Well, only one thing is certain and that is death. If you don’t have life insurance someone will have to cover those costs. That’s an automatic debit to someone’s account. How can we build wealth if we ignore and don’t plan for inevitable costs?
 
“A man that has not prepared his children for his own death, has failed as a father.”- King T’Chaka
 
So with that said ,the first purpose of life insurance is to cover death expenses. That is minimal, that is basic, that is necessary, that is required.
 

However, there are other ways you can use life insurance to build wealth.

        1. Cash Flow

Life Insurance accumulates a cash value. You can borrow a loan against it (of course with interest). You then have the option of paying it back or having it deducted from the death benefit. These funds can be used to fund college, start a business, pay off debt, or so something else you’ve dreamt of doing.

2. Illness

Depending on severity, some polices will allow you to access a portion of the death benefit while you’re still alive to assist with medical expenses.

3. Cover Estate Taxes

Beneficiaries can use the tax free life insurance to cover federal and state estate taxes. This allows them to enjoy 100% of the assets.

 

4. Supplement Your Retirement

As Millennials, we don’t think enough about retirement. If you earn a high income now you likely max out your contribution to your IRA’s and 401(k). That accumulated cash value from an insurance policy can serve as additional income and it is non-taxable.

5. Fund Charity

We all appreciate the work charities do and we wish we could give more. But instead of donating your hard- earned taxed wages you can leave your favorite charity a portion of your life insurance. This money would be donated tax free to the charity.

6. Irrevocable Life Insurance Trust

This is a trust, funded by life insurance, that can be used to protect your beneficiaries from estate taxes because the trust is not considered to be part of the estate. It also protects the recipients of the trust from creditors.

 
Even if you don’t see yourself utilizing any of the options mentioned in this article please, if for no other reason, make sure you are adequately insured so that your death does not cause a loss of wealth to your loved ones. This is the first step in building generational wealth and a pivotal step in closing the wealth gap.
 
 


from the lawyer next door,
Crystallace Fenn

FTC: I participate in an affiliate marketing program. If you choose to make a purchase as a result of clicking a link, I may receive a small commission of the sale. This helps me run my blog and I don’t talk about things I don’t actually use.

Legal Disclaimer: Although I am a lawyer by profession, I am not YOUR lawyer. All content and information on this website is for informational and educational purposes only, does not constitute legal advice and does not establish any kind of attorney-client relationship by your use of this website.

about the blogger
Hi, I’m Crystal and welcome to my blog. I’m a Millennial (and a lawyer) who enjoys sharing and helping others.
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