Reflections on LIAM (Life Insurance Awareness Month)


What’s in it For You??

September is Life Insurance Awareness Month (LIAM), did you even know? You might have seen a television commercial or seen a print ad that let you know, but you probably didn’t, and may be thinking of leaving this post right now. WAIT A MINUTE! Give this a couple of paragraphs before you go on to something else, I think it might be worth it.

Most of the time, articles and posts about LIAM talk about the protection provided by the death benefit and how it protects loved ones, businesses, associates, lenders and a host of others from financial ruin, should the person or persons financially responsible for a family, household, business or transaction die unexpectedly. While this is true, and these are many of the primary reasons to purchase life insurance protection, I wanted to take a few minutes and let you know about some of the other ways you can benefit from life insurance, not just after you die, but while you are alive!

Life insurance is really the Swiss army knife of the financial world. There are so many ways to use and benefit from this tool that entire books can be written on the subject. Today I want to introduce you to just a few.

5 Ways to Profit from Your Life Insurance

  1. As a high paying alternative to a savings account- a properly structured permanent policy can pay interest as high as 3-5%, net of taxes, and still be fully liquid. I have one client who just had his cash value increase over 9%, net of tax, on his whole life policy just last year!
  2. As a replacement for bonds in your portfolio- Instead of losing money on a bond mutual fund when interest rates rise, many investors are replacing their bond portfolio with overfunded life insurance policies. They won’t lose principal when rates rise, but dividends tend to go up when rates rise.
  3. As a “permission slip” that allows you to spend your savings- since premiums in a permanent life insurance policy buy a much larger death benefit than what you paid, you can then spend down principal on your other savings and investments without shrinking the estate you leave to others. This lets you spend more and take less risk.
  4. As a source of financing for business ventures and investments- many successful business people from Walt Disney to J.C. Penney to my grandfather have exploited features of their life insurance to grow wealth as well as protect it from catastrophic loss.
  5. As a source of tax free income in retirement- again, properly structured policies can provide a significant source of tax free retirement income. It can be used as a sort of Roth IRA alternative. This strategy has been used by wealthy executives and others for decades (even before there was something called a Roth).

We have only briefly outlined a few of the many advantages and uses that one can benefit from using properly constructed permanent life insurance. I have answered questions online about some of these uses and have written on my blog last year at this time on this topic. If you would like to know more about how Life Insurance can improve your financial life, contact us here, and we can arrange a time to discuss.

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