What Else is Life Ins Good For? : Action Financial Strategies LLC | New Holstein, De Pere & Cottage Grove, WI

What Else is Life Ins Good For?

(Hint: it’s more than just a protection tool!)

Do you own life insurance? Should you own life insurance? If there's a reason to have coverage to protect liabilities in the event of your death, have you ever looked at life insurance as a tremendous tool to build wealth, and in some cases be even better than many retirement accounts that are available?

When you look at life insurance, proceeds upon death are not taxed. Unless you would convert IRAs to Roths, you will have to pay income taxes on those distributions. And where do you think taxes are going? There's also increased taxes based on the size of your retirement plans. So traditional plans may need to have a second look.

Many people -- once they own life insurance for a period of time – understand that it's not some kind of expense or obligation that they have to pay, but rather an investment opportunity.

Let’s look at Whole Life Insurance

In whole life the life insurance policy is not at all tied to the stock market. I always tell my clients that life insurance is very leverageable. What that means is that one dollar buys hundreds (or even a thousand) of dollars of death benefit. So oftentimes, not only can it be a tremendous tool to supplement income and retirement on a tax-favored basis (through accessing the cash value of a permanent life insurance policy,) but the life insurance benefit can be used to create liquidity upon an individual's death, pay an individual's debt upon death, and perhaps have some type of estate equalization between families.

Market Volatility

Think about how volatile the market has been, and many of our clients have assets under management in the market. Over the last 12 months, look at how volatile our market has been. In 2022, the S&P lost over 20%. Imagine if this was the only place you had your wealth accumulating; and then it was time to take income. Not only do you have a loss, but an income distribution need to buy groceries and pay the bills -- a double whammy in loss and difficult to recover. Of course, the past performance of the stock market is no indication of its future results.

Cash Value

Wouldn't it be neat if you had something that was accumulating value at a steady minimum level? And, could be accessed? Most people realize after owning cash value life insurance for several years, that if they could turn the clock back, they wish they'd done more.

When I review with clients who have had their insurance portfolio for over 30 years, it's a common comment. The cash value of a whole life policy grows on a guaranteed and nonguaranteed basis.

Therefore, when looking at a retirement planning model, life insurance really should be considered not only just a protection tool, but an integral part of anybody's future retirement plan.

headshot of Bradley

Brian Ruh Owner, Financial Adviser

This material is for general informational purposes only and was produced by Action Financial Strategies, LLC. Life insurance is subject to underwriting. No coverage exists unless a policy is issued and the required premium is paid. Neither Action Financial Strategies nor NYLIFE Securities LLC or its affiliates provide tax, legal, or accounting advice. For advice on such matters, consult your own professional counsel.

Brian Ruh is a Member Agent of the Nautilus Group®, a Service of New York Life Insurance Company. Brian Ruh CA insurance license #OB66341. Brian and Bradley Ruh are collectively Registered Representatives of and offer securities products and services through NYLIFE Securities LLC. Member FINRA/SIPC, a Licensed Insurance Agency 999 Fourier Drive, Suite 300, Madison, WI 53717. (608)831-4416. Brian and Bradley Ruh are also collectively registered as Investment Adviser Representatives with Eagle Strategies LLC, a Registered Investment Adviser. Action Financial Strategies is not owned or operated by NYLIFE Securities or its affiliates.
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