If Whole Life Insurance Is So Attractive, Why Haven’t I Heard?

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So you’ve read about how the best whole life insurance consists of: coverage for your entire life; guaranteed premiums; the tax-deferred cash value build-up; tax-free death benefits;  tax-free access to cash value via policy loan; competitive rate of return; guarantees; creditor protection; unlimited contribution; unlimited investments; collateral etc. But why haven’t you heard all this before?

Why aren’t there ads on television and in the newspaper highlighting these tremendous benefits? Truth be told, the government has bestowed some incredible tax advantages on owners of permanent life insurance policies such as whole life and universal life. These loopholes have survived because in the eyes of the IRS and lawmakers the whole life insurance policy is not a mainstream product such as a 401(k) or IRA. If life insurance companies started mass marketing these whole life insurance benefits, Congress may come after these great tax advantages. Given the large government debt of the US, they could be forced to restrict or abolish the tax-deferred growth benefits.

A fear of losing these advantages certainly does exist. There are also many insurance companies that do not offer the best whole life insurance policies or simply do not offer them at all. Many of the companies that offer whole life insurance are long-standing, large companies. When the company’s investments perform well, its mortality experience is positive, and it generates good profit margins.  This is how it pays a dividend that gets put into each whole life insurance policyholder’s cash value. In addition, the policyholder’s cash value receives the 4-5% guaranteed interest rate depending on what type of company it is.

Lastly, most traditional investment, financial or insurance salespeople either do not understand the whole life insurance policy or work for companies that do not offer competitive whole life insurance policies with a history of strong dividend payout or simply do not sell insurance products. Therefore, these companies are pitching the “buy term insurance and invest the difference” concept. These same salespeople are often mediocre, lack in-depth overall financial planning and insurance experience, and can even be biased.

Most wealthy Americans are taking advantage of the tremendous tax benefits of whole life policies while they are alive and passing on sizeable death claims to their beneficiaries. They do this without paying any taxes by structuring the policy in the correct manner. Famous retailer J.C. Penney borrowed from his life insurance policies to help meet the company payroll following the 1929 stock market crash. In 1953, Walt Disney borrowed from his life insurance, sold his vacation home, and borrowed money from employees to fund Disneyland, his first theme park. Recent industry surveys show that 75% of the Fortune 1000 companies have Corporate Owned Life Insurance (COLI) plans in place and almost 3800 banks own $140 billion in bank owned life insurance (BOLI) policies using permanent insurance policies.

Life insurance, investment, financial planning, tax planning and wealth creation are much more complex than most people think or even understand. We have been helping more 3000 physicians, 1000 dentists, 3000 successful business owners and 600 independent pharmacy owners create most optimal asset allocation, reduce taxes, build proper insurance strategy and create sizable wealth for last 17 years. Please call (877) 972-3262 or contact us for the further information.

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