Benefits of owning permanent cash-value life insuranceArticle added by Lew Nason RFC, LUTCF on April 28, 2009
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As we've discussed in previous articles, if you want to succeed with selling life (or any product), then you must ask questions to get prospective clients emotionally involved in the sales process. This will help your prospect see and understand the financial problems they are facing now -- and in the future. After all, if your prospect does not see they have a problem, then why should they take the time to meet with you... or buy from you?
People buy based on emotions and justify their decisions based on logic
Once you've helped your prospect to identify their problem, they will be emotionally involved and want to solve their problem. Then, you can provide them with the logical reasons (benefits) of why they may want to use permanent cash-value life insurance (whole life, traditional universal life and index universal life) as the foundation of their financial plan.
Benefits of owning permanent cash-value life insurance
Permanent cash-value life insurance is a very unique and flexible financial planning tool to help your clients and their families achieve real financial independence. Properly structured and properly funded, cash-value life insurance provides clients with these exceptional benefits:
The cash accumulated in your policy can provide you with a tax-free income in retirement. (Taking withdrawals up to the cost basis and then borrowing the remainder.)
- First and foremost, cash-value life insurance provides your client's family with the money they need in the event of a death to replace lost income, pay off mortgages and consumer debts, and to pay any medical and burial expenses as a result of a family member passing away.
- By purchasing cash-value life insurance while you are young, the premiums are low, and will remain level throughout your entire life (if properly funded).
- You own the policy instead of renting it; you have complete control.
- You don't have re-qualify for the death protection as you grow older.
- Cash-value life insurance is a forced savings plan. It forces you to pay yourself first. When you understand that a portion of all you earn is yours to keep but not to spend, great wealth won't be far behind.
- Unlike qualified plans, there are no caps (limits) on how much money you can save each year. You are limited only by the size of the policy.
- Your cash values accumulate tax deferred.
- You have a liquid "emergency fund" for life's unexpected events.
- As the cash values accumulate, you are buying and paying for less death benefits.
- The cash values can be accessed income tax-free and penalty-free prior to age 59½.
- Because of the disability waiver of premiums and death benefits, cash-value life insurance is the only self-completing savings, college funding and supplemental retirement plan.
- Cash-value life insurance is not attachable by creditors.
- Cash-value life insurance doesn't count as an asset when you apply for college financial aid.
- By over-funding a cash-value life insurance policy up to the MEC guidelines, it can become "investment-grade life insurance" (Missed Fortune concept).
You'll have the protection of life insurance in your retirement years to replace lost pension and Social Security income at your death (pension max concept).
Unlike qualified plans and annuities, the death benefits and cash values are transferred income tax-free to your beneficiaries.
Cash-value life insurance generally bypasses probate (and it is private, so there are no public records).
Cash-value life insurance can be used to pay income taxes on qualified plans, annuities and your estate taxes at your death.
Safety: All 50 states have something similar to FDIC for life insurance policies and annuities. Plus, insurance companies must, by law, cover at least 100 percent of their liabilities with reserves, hence the term "100 percent legal reserve life insurance company." There are also regulations as to the percentage that can be held in certain forms of assets. This system has produced a remarkable overall record of solvency and safety.
Guarantees: Only life insurance and annuities guarantee your investment principal and offer you minimum growth guarantees for the life of the contract.
You can also use permanent cash-value life insurance to create your own bank, as outlined in Jeffrey Reeves's "Money for Life" and "Infinite Banking" concepts.
Please click this link to read Reeve's article, "The four pillars of every successful personal economy" before continuing this article.
As you can see, permanent cash-value life insurance, besides providing protection for your family, is an extraordinary savings tool. Its unique income tax treatment, safety, guarantees, privacy, self-completion and use as your own bank make it an extremely valuable addition to almost everyone's portfolio and financial plan.
© 2008 Lew Nason, RFC, LUTC Graduate - All rights reserved
*To discover more about what Lew Nason has learned in his 30 years' experience and his "Found Money Management" program, please use the forum below and include "FMM" in the subject line.
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