When it comes to building a legacy, there are a few ways you could go about it. And quite frankly, there’s actually one way where you could guarantee a legacy being passed on to your family members or charity of choice. And that is with whole life insurance.
Many people want to pass on a legacy but may be wondering how. When it comes to building enough wealth to actually pass on a legacy, you come into some risks. You have investment risk, you have longevity risk—the risk of outliving that money—and taxation risk. So the question becomes, how do we guarantee this legacy that we want to be passed on to the people we care about instead of the government, the markets, or a nursing home?
The point is, when planning for a legacy, you need to plan. And that doesn’t mean you all of a sudden wake up at age 75 and say, “Okay, let’s start planning.” It’s really something that has to be done throughout your life in preparation for the day when you pass on your legacy to the next generation or to the charity of your choice.
Now, I guess if you are age 75, you would be able to pass on a legacy—assuming you’re still insurable. But usually by the time people start thinking about legacy, it’s after their health has diminished and they’re no longer able to qualify for whole life insurance. So what happens is it ends up costing more to give the same amount of money to your family or your charity of choice. That’s why planning in advance—even just enough in advance—can make a big difference. And of course, the sooner, the better.
With life insurance, you’re purchasing dollars for the future with discounted dollars today in the form of premiums. It’s literally paying pennies for dollars of future delivery. And that’s a key point, because life insurance puts you in a position where you can leverage your assets.
For example, if you have $500,000 in investable assets and you plan to leave that to your children or grandchildren, that’s $500,000 of legacy. But technically, it’s less—due to taxation and the cost of transferring that money through traditional means, especially if your state has an inheritance tax.
With whole life insurance, you can use the interest from those investable assets to potentially pass on an even greater amount—say $1 million—by pairing the $500,000 in investments with an additional $500,000 of life insurance coverage purchased using that investment income.
It all comes down to making your money as efficient as possible. By combining whole life insurance with smart legacy planning—whether that includes naming a beneficiary, designating a charity, or setting up an irrevocable life insurance trust—you create the structure that ensures your intentions are carried out.
And that’s the real power here. If you leave your wealth to the uncertainties of the market or a potential long-term care event, you can’t be sure that what you want to happen will actually happen. But with whole life insurance, you’re working with one of the only financial tools that guarantees that your legacy will be fulfilled—even if you’re not here to see it.
If you’d like to learn more about how to put these strategies to work for your specific situation and guarantee your legacy, hop on our calendar. Visit www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started today. Remember: It’s not how much money you make, it’s how much money you keep that really matters.