How to Use Whole Life Insurance to Create Wealth

How to Use Whole Life Insurance to Create Wealth

If you are like most of our customers, when you hear the term whole life insurance, the first thing you think of is a death benefit. While it is true that life insurance can be used to pay funeral expenses and protect your loved ones in the case of an untimely death, whole life insurance is something a little more complex in nature. And rightly so.

When used wisely, whole life insurance can build wealth and create a potential cash pocket that can be accrued on a tax-free basis. If these words make your ears perk up, then you might be interested in taking a deeper look at how whole life insurance can help you create wealth when appropriately used.

Accumulate Value Over Time

Unlike other life insurance plans, when you purchase a whole life insurance plan (also sometimes referred to as a permanent policy), you are building cash value along with your death benefit. The cash value component of your policy will grow every month at a rate that can be as much as six to seven times more than the interest rate attached to a standard savings account.

In addition, they are protected from bankruptcy, so any cash value you accumulate is yours until the date of death. You also don’t need to pay taxes on any accrued interest, and they tend to be much safer than bonds, stocks, and other similar investments. Given the current market volatility, that fact alone may be reassuring.

Add in Riders to Protect You Later in Life

Whole life insurance premiums do more than protect your dependents if you die; they can also protect you later in life if you use your plan wisely. This is due to the fact that many plans offer additional riders, which you may pay more for now but will be grateful for later in life.

Take Advantage of Low Premiums

Unlike other insurance plans, whole life insurance plans do not expire until you die or choose to cash out your policy. That means once you are assigned a premium, you will enjoy that same low rate for the rest of your life. 

With whole life insurance plans, you pay the same amount at age 70 that you did at age 22. While you may pay higher premiums initially by choosing a whole life insurance policy over a ten-year term, it will pay off as the years go on.

For further questions or concerns pertaining to whole life insurance policies and other investing approaches, don’t hesitate to reach out to us at DBA. We are happy to help you make the most informed and effective decision possible.

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