With markets uncertain, many investors are not ready to let their investments get cut in half again like they did in 2000 and 2008.
Many thoughtful adults are thinking about new forms of lower death benefit, higher cash value endowments. This special form of life insurance is not well known among the many internet journalists who know only one mantra: Buy term and invest the rest. With the market at all time high’s, where does one invest and feel good about it? And if you buy term, it will only get more expensive after your term expires and will pay you no living benefits.
The New Generation of Cash Value Life insurance includes new avenues for extra cash accumulation plus “Living Benefits” for eventual long term care funding.
Unlike the stodgy old policies of the past, today’s policies offer more potential for cash accumulation, tax free income for life, and emergency access (with one simple phone call.) These policies allow for creating the equivalent of your own “family bank”, and can build financial security over time. In addition, the added benefit of tax free lifetime income and tax free long term care funding make this retirement vehicle hard to ignore.
Caution: Not just any off-the-shelf policy will work. The policy must be carefully chosen, properly selected, properly arranged, and properly constructed. This requires the skill of an experienced advisor who is no rookie to life insurance. These New Generation Life policies with lower death benefits and higher potential cash values can solidify a financial plan like no mutual fund can do.
Age 25 to 55: Both whole life and index universal life can be effective for building cash, education funding, retirement reserves, and providing protection for your family.
Age 56 to 83: Explore Index Universal life with cash value for a combination of estate protection with cash access. For the most insurance per dollar, look at guaranteed no-lapse life insurance. It is pure insurance with no cash value, guaranteed through age 120. To maximize cash value, many people have found satisfaction with a cash value policy that insures two lives, rather than one. This lowers the overall cost of insurance, allowing more of your contribution/premium dollars to move toward cash accumulation, and less to insurance. With joint life insurance, the death benefit is not paid until the second person passes away. It is often referred to as “second to die” insurance for that reason.
Both no-lapse guaranteed universal life and cash value life can have provisions that allow you to convert the death benefit into long term care benefits, tax free. This allows you to get more “bang” for your buck.
The phrase “Buy term and invest the rest” works only for those individuals who follow the rules to the letter. If you truly will invest every penny you would have placed into the properly constructed cash value life insurance policy, every month, from now on–and you give it 15 to 30 years to accumulate, compound, and grow, then you have a shot at doing well. Unfortunately, you still won’t own a potentially tax free income for life or an exceptional 10-to-1 death benefit.
The more appropriate advice for those who are nearing retirement, age 40 to 75, may be this trademarked phrase by IQ Wealth Management: “Insure your income, insure your outcomes, invest the rest with purpose®”. Before you make the mistake of cheapening your retirement strategy and your plan for your family’s financial security, explore the next generation of “>lower death benefit, higher cash value investment grade life insurance endowments.
A Kiplinger contributor, Steve Jurich heads IQ Wealth Management in Scottsdale, Arizona, a registered investment advisor. He is a Certified Annuity Specialist and a Certified Income Specialist and the author of the Amazon best seller, Smart Is The New Rich. You can hear his daily radio program, Mastering Money, broadcast on Money Radio in Phoenix (1510AM, 105.3FM) or choose from his podcasts, CLICK HERE