Life Insurance Sales Booming

Jessica Lanning

Investment News (which is sort of like People magazine for investment folks) in its April 20, 2010 issue reports that life insurance sales are booming in the first quarter of this year.  This is not a surprise.  I’ve been touting its benefits for years.

Since when did life insurance get so sexy?

The problem is that people often think of life insurance as another one of those things that you have to buy when you become a grown up, get married and have children.  It is yet another annual expense that seemingly has no value at all unless one dies.  Then to add insult to injury, the dead person doesn’t even get to use the death benefit proceeds.  It’s no wonder that people joke that life insurance is designed to keep you broke while you’re alive so you can die rich.

If this is your belief system, you might need to get your mind right.  In all honesty, there’s some truth to the above statement.  If you have young children, business partners, or dependents, you do need life insurance so that if you die, there are assets available to support them.  Or, if you stand to die with more than $1 million, then you might want the money to pay estate taxes.  In any event, you’re buying the policy for death benefit purposes.

But you can buy life insurance for life benefit purposes, and this is where people are missing the opportunity.  The article quoted a planner saying that “There are people who are making at least $250,000 a year and who will be targeted for higher taxes….  Cash value insurance is a Roth IRA for rich people, and they can tap that money judiciously.”  This is a true statement.  Cash value life insurance contracts are one place where you can grow money tax-free (well, tax-deferred if you want to get technical) and access it tax-free (if the contract is created and funded properly).  I spend my days showing people how to create tax-free retirement income, create buckets of money to meet education funding goals and disability income supplementation, and how to create “Roth IRAs on steroids” for employees who can’t put enough money away in their company’s retirement plans or business owners who have not adequately saved for retirement.  I show people how to keep their social security benefits from being taxed.  I show people how not to outlive their money.  Life insurance, believe it or not, can play a huge role in making that plan work.

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