How Life Insurance Can Help You Build Wealth | Farm Bureau Insurance (2024)

FAQs

How Life Insurance Can Help You Build Wealth | Farm Bureau Insurance? ›

Life insurance policies, such as Farm Bureau Insurance's whole life policy, often come with a cash value component. As you pay your premiums, a portion of them goes towards building a cash value within your policy. Over time, this cash value can grow on a tax-deferred basis, and this allows you to accumulate wealth.

If you're considering how to use life insurance to build wealth, then you can start by looking for a policy with a cash value component. For cash value accounts, the insurer takes part of your insurance premium and puts it into an account intended to increase in value over time.

Expenses and taxes can significantly reduce the inheritance beneficiaries receive due to medical bills, debt, funeral costs, legal fees, and estate taxes. Life insurance helps leave a larger inheritance by providing a death benefit that covers expenses and increases the amount received by beneficiaries.

Life Insurance as an Investment

Permanent life insurance policies that last your entire life can build cash value. This is money you can withdraw or borrow while alive. The policy also grows your cash value over time. For example, whole life insurance can offer a fixed return with steady tax-free dividends.

You want a death benefit amount that will provide funds to cover the items your family will need money for. For instance, if you want life insurance to replace your income if you were to die, you need a policy with a much higher death benefit than if you want a policy to simply pay for your final expenses and burial.

Life insurance payouts are sent to the beneficiaries listed on your policy when you pass away. But your loved ones don't have to receive the money all at once. They can choose to get the proceeds through a series of payments or put the funds in an interest-earning account.

Life insurance is a great wealth transfer asset because the proceeds are inherited estate and income tax free, and can be used for goals like providing liquidity to pay for estate taxes, or transferring wealth directly to your beneficiary(ies).

✅ Why is life insurance important? Life insurance is important because it provides financial security to the family in case of the unfortunate death of the policyholder. Life insurance can enable the family of the policyholder to stay financially independent so that they do not have to compromise their lifestyle.

Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.

To make the infinite banking concept work for you, simply request a loan from your life insurance policy. This is accomplished by submitting a policy loan request form. Once they verify the funds available in your life insurance cash value, the insurance company sends you a check or processes it electronically.

How to make money with your life insurance? ›

A wealth creation plan offers to pay the fund value at the end of the policy term. In the unfortunate time of death during the policy term, the family receives the lump sum amount, known as Sum Assured. Wealth Plan ensures wealth creation for both long-term and short-term.

The primary purpose of life insurance is to provide a financial benefit to dependents upon premature death of an insured person. The policy pays a specified amount called a “death benefit” to the named beneficiary, when the insured dies.

Among several advantages of life insurance, financial security, and peace of mind are hugely significant. You can rest assured your family will not have to compromise due to financial burdens in case of a mishap. It will also help them in taking care of financial liabilities, such as loan payments.

It can help you live life with fewer worries knowing you'll receive financial assistance after a disaster or accident, helping you recover faster. When it comes to life insurance, this could mean your family doesn't have to move out of the house or that your kids can afford to go to college after you pass away.

Life insurance with cash value can be used as an investment tool. As you pay premiums, a portion goes toward your cash value, which will grow over time. Once you've built up enough cash value, you can access it in several ways, including getting a policy loan and withdrawing funds.

It is important to note that interest and gains accrue on a tax-deferred basis - a key advantage that life insurance has over many other financial vehicles. Then, after you have built up cash value, there will come a point when you are allowed to access the cash.

If they buy a life insurance policy that costs $2 million rather than transferring that directly to an heir, they not only avoid the gift tax, but they could instead pass down $8 million from the proceeds of the death benefits and slash the percentage of their estate that's taxed at that time by hundreds of basis ...