Life Insurance: Buy It For Coverage, Buy It For Wealth

Life insurance has been used for over 150 years to build wealth. It has been the source of funds for such famous families as the Carnage’s and the Rockefeller’s. Why has this method been forgotten? The truth is hasn’t.

The New York Stock Exchange

The New York Stock Exchange has been around since 1817, at least in its more common form. The stock exchange did not produce mass volumes, however, until the early 1900’s where it produced gains a total volume over 6 times what it had in the past. For this reason, the New York Stock Exchange became the primary source for building wealth in the United States. After all, you would have to be a fool not to invest as you simply could not loose.

This story sounds familiar. Even though huge gains will always be possible with any traded stock, there is room in everyone’s portfolio for guaranteed cash value. There are even ways you can retire almost solely on life insurance.

Life Insurance Cash Value

Some life insurance policies gain cash value. These are permanent policies. They never expire, as long as you continue to pay your premiums you will have life insurance coverage. You will also be gaining a certain amount cash value. If you keep the policy for most of your life, you can have a significant amount of money in the policy. For the average person, here is a good way to buy permanent life insurance that can act as a huge part of your retirement program.

Age 18 for your high school graduation present, instead of a bunch of cheesy presents, ask for a small permanent life insurance policy. A $25,000 policy costs around $30 a month for a quality participating policy with a waiver of premium. Below are some definitions:

Participating Policy a policy that pays its policy holders’ dividends based on profits that are left over at the end of the year. Only mutual insurance companies pay dividends. The most common are Northwestern Mutual and Mass Mutual. There are other companies that offer a dividend that are publicly held.

Waiver of Premium

This is a clause in an insurance policy that allows a person to keep their coverage with no obligation to pay another premium if they become disabled. This clause should be on every policy.

At the age of 20, you should by another small policy. This will cost around $50 a month for a $25,000 policy. By now the policy you originally bought has a few hundred dollars’ worth of cash value and your death benefit has also increased.

Age 23 At this point, you have graduated college and have probably worked a steady job for a few years. This is a perfect time to buy another small policy. By now you have a few thousand dollars in you policies and your death benefit is somewhere around $100,000. Also, you miss the premium increase at age 25. The cost is going to remain around $50 a month.

Age 27 You probably have a family by now or have a significant other. It is time to buy a large policy that will cover you. You have around $130,000 worth of life insurance by now, probably a $100,000 through work. Another $100,000 policy would be more than enough to provide a sizable death benefit if something happens to you. It also will yield a sizable cash amount later in life. It will be expensive, around $100 a month.

Age 65 You have worked hard and are ready to retire. You probably have a 401K that you have built and are ready to roll it over into an IRA account. You will start to use the funds you have built up in your 401K for retirement. You will collect social security at 66 1/2 that will add even more monthly income. You don’t have to pay your life insurance premiums anymore because you chose to purchase insurance where you stop paying premiums at 65 but still get paid the dividends. By now, there are several hundred thousand dollars in coverage and several hundred thousand dollars in death benefit. You can use it now and take a payment that will last a lifetime, or you can wait until you are 70 or older and take a larger payment for life. The choice is up to you.

This is just one way that things could play out. But this is how you can stage buying life insurance to not only cover your family in case of death, but to cover your retirement in case the stock market can’t support the load. There are vast variations of permanent life insurance. Talk to your insurance agent to see what is right for you. You can choose from a wide variety of insurance policies and decide for yourself what are the best life insurance plans for you and your family.