Do you have or believe in life insurance? Years ago, I was not a fan and didn’t see the philosophy. Then when I worked as a financial planner and compliance for a group of financial advisors, I was taught and saw the benefits at work.
Life Insurance is one of the tools that the wealthy utilize to maximize wealth transfer and ensure the family wealth reserves for their future.
Imagine that you want to leave a charity a large sum. But, you still want to cover your grandkids college or buy their first home. You only have so much money to spend. But if you buy life insurance, you can leverage your money and possibly do it all.
Years ago, my assistant mentioned that her mother had no money and was not taking care of her health. She was mentioned that her mother’s final costs would have to be paid for by her, because the siblings would never kick in.
I suggested she get a life insurance policy on her mother. If she calculated the final costs and added in several years’ worth of premiums to get their money back, she could cover the final arrangements and it would ultimately cost her nothing. She really liked the idea, but her mother refused to get the physical for the $50,000 policy.
If you wanted to buy a $300,000 house for a grandkid in the future, you may get a $500,000 policy. This should repay the premiums and have the funds for the home. The net effect on the estate would be zero if the premiums were replenished by the policy coverage, through split beneficiaries.
This is a tool that can give you leverage.