Maybe wealthy people know something you don’t—because savvy, affluent people are turning to life insurance for more than the death benefit. They’re using it to create even more wealth that can fuel everything from business to family support and retirement.
The concepts I’m about to share may blow you away as you learn why wealthy people in the know buy more and more life insurance the older they get.
As a retirement planning specialist for more than 45 years, I’m often asked about the best place to put money, serious cash, for retirement. People are looking for a place where their money can still be liquid, accessible when they need it. They want safety from market volatility. They want to accumulate money at predictable rates of return. They want tax advantages during the accumulation phase, the distribution phase, and the transfer phase. And they want the retirement vehicle to generate income throughout retirement; they’re worried about outliving their money.
BATTERY VS. GENERATOR
The problem is there are three big things that drain that retirement battery:
- Taxes
- Inflation
- Market volatility
In 2008 at the start of the Great Recession, millions of Americans saw for themselves the significant toll market volatility can take on retirement dollars, when they lost 40% of their IRA and 401(k) account values in a single year.
Rather than rely on a retirement battery, I help people turn to retirement generators, vehicles that can generate tax-free income that can be immune from taxes, market volatility, and protect against inflation.
The vehicle that accomplishes this best is a maximum funded indexed universal life insurance policy, structured correctly and funded properly–what I call a LASER Fund.
DISNEY, PENNEY, KROC & MORE
At my multi-day events, I’ve shared the examples of wealthy folks who are proponents of owning a lot of permanent life insurance, people like Walt Disney, JCPenney, Ray Kroc (who started McDonald’s), and David Walker (Comptroller General at the General Accountability Office from 1998 to 2008).
My audience members have asked, “Why did they need life insurance? They had the money.”
Well, actually there was a point in all of their careers where they didn’t have the money, and money inside their insurance policies was their saving grace. James Cash Penney, for example, bailed out J.C. Penney stores and kept the company alive by accessing money the smart way, by borrowing it out of his insurance policies.
Do you know that Ray Kroc did the same thing to keep McDonald’s alive? We wouldn’t have McDonald’s today if it wasn’t for his life insurance policies that gave him liquid access to cash, tax-free.
Same thing with Walt Disney. Now, the inspiring thing about Disney is he went broke about seven times and even suffered a nervous breakdown before he finally made it. When he was out of resources and about ready to throw in the towel, he borrowed money from his life insurance policy to get through, eventually launching Disneyland and everything that we enjoy today from Disney.
As for David Walker, in 2008 when the market dropped 40% for the second time in a decade, he resigned from his post as Comptroller General. From there, he went around the country and told people the safest place to protect serious cash from market volatility was in max-funded indexed universal life insurance policies.
WHAT DO THEY KNOW?
Now, what do these wealthy people know that you might not know?
That life insurance can do more than provide a death benefit–it can provide powerful living benefits.
A lot of people think life insurance is just there to protect your beneficiaries in the event of a premature or untimely death. They focus on its ability to help your spouse, children, and grandchildren continue on with financial dignity after your passing.
And yes, life insurance is excellent for that. I’ve had a lot of clients who have passed away, and the death benefit was a blessing to those they left behind. But most of my clients never came to me wanting or even needing life insurance for the death benefit. They had the money. Yet here they are in their 60s, 70s and 80s buying life insurance? Why?
They are using life insurance for the living benefits. They are borrowing money from their policies for things like business capital, funding grandchildren’s education, purchasing real estate, and more.
TAX-ADVANTAGED GROWTH
They understand that properly structured LASER Funds are where they can accumulate their money tax-free, thanks to Internal Revenue Code Section 72(e).
LIQUIDITY WHEN YOU NEED IT
They know that any time they want to access their money, they can borrow from the policy. Even right after they initiate the policy. We had a client years ago who put in $200,000 saying, “I’ll never touch this for 20 years.”
Two months later, she was in this horrible accident. She called me and said, “Doug, I’m in critical care. I need $120,000 of that 200,000.” Within a few days the check was in her mailbox. Her money was liquid. And she did not have to pay income tax or a 10% early withdrawal penalty on that $120,000 like she would have if it had been in an IRA or 401(k).
SAFETY FOR YOUR MONEY
These wealthy people know that they want safety for their money. They want institutions that are safe, and they want safety of principal. As evidenced during the Great Depression and Great Recession, when the economy takes a serious nose dive, banks fail long before any insurance companies. And even in the worst possible scenario, you’d have lots of warning to get your money out of your insurance policies, unlike the banks.
Also, with properly structured indexed universal life insurance policies, you enjoy safety of principal. When the market goes down, your policy value is protected by a 0% floor. You won’t lose any principal due to market volatility. This was a huge relief for our clients during 2008 when the rest of the country with money in IRAs and 401(k)s were losing 40% of their account values, our clients with LASER Funds weren’t losing a dime to market volatility.
PREDICTABLE RATES OF RETURN
They also want to earn predictable rates of return. They know they don’t need pie in the sky rates of return. With LASER Funds, some years they’re going to earn 25% and even 60% like many did in 2021. But looking at history, your policy can earn interest based upon index strategies that have historically averaged 5% to 10%. This is why folks like Walt Disney and James Cash Penney and Ray Kroc and David Walker and many savvy people will buy the insurance for the living benefits.
TAX ADVANTAGES
They also want tax advantages. They want their money to grow tax-free, they want to access it income-tax-free, and when they pass away they want to transfer their money to their heirs income-tax-free. All of that happens with a LASER Fund.
This is why wealthy people in the know have multiple life insurance policies. If you’re intrigued to know more about what they know, let me show you how.
WANT TO LEARN MORE?
Watch the Video – Watch the related YouTube video to see me explain “Why Do Wealthy People Buy So Much Life Insurance?” (and while you’re there, be sure to subscribe to my YouTube channel so you don’t miss a thing!).
Elevate Your Financial Dimension – Find out how you can improve your Financial Dimension journey and seize the liquidity, safety, predictable rates of return, and tax advantages of a LASER Fund. Explore the in-depth financial strategies and learn from real-life client experiences by claiming your free copy of “The LASER Fund” book at LASERFund.com. Just pay for shipping and handling, and we will send it to you, absolutely free.
Join a Webinar – Want to find out if a LASER Fund (a maximum-funded, properly structured indexed universal life insurance policy) is right for you? Join us for an upcoming webinar where you can explore these strategies.
