Why High Net Worth Families Keep Money In Life Insurance - Part 3

5-ish Minute Private Family Banking Podcast.

Why High Net Worth Families Keep Money In Life Insurance - Part 3

Private Family banking is a long-term financial strategy. We teach people how to leverage a high cash value permanent life insurance policy to take control of their household finances.

This is the third and final episode discussing why high net worth families keep huge sums of money inside life insurance policies.

In Part 1, we discussed how to avoid a policy becoming a MEC and how proper structure can maintain the tax advantages that high net worth families enjoy when using the Private Family Banking Strategy.

In Part 2, we covered conservative and stable returns, access to capital without going through loan approval processes and continuous growth.

Today we discuss asset protection and privacy, estate/legacy planning, peace of mind, and generational banking strategies.

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Transcript

SPEAKER_00 0:20

Hey guys, Mike here. Welcome to the five-ish minute private family banking podcast. Today is part three, and is probably the last in the small series about why high net worth individuals like to keep money inside of whole life insurance policies. We looked at, if you missed parts one and two, please go back and look at them. We talked about the tax advantages of doing this. We talked about consistent growth. We talked about access to the cash. Now, today we're going to look at a the last couple of things. We're going to start by looking at asset protection and privacy. Okay. So start with creditor and lawsuit protection. Okay, in many states, the cash value of uh that's inside of the life insurance policy is going to be protected uh strongly from creditors and judgments, uh, which is very appealing if you maybe uh are a doctor or a business owner or you have lots of real estate where uh you may be subject to litigation at any point in time. Um for whatever reason you find yourself in a situation where you are being litigated against, uh generally the cash value inside of these whole life insurance policies is protected from anybody who's seeking damages against you. Okay, and this makes it a relatively safe place to hold the money when compared to leaving large cash balances exposed in either personal or business uh bank accounts. Um, it's also a kind of a private, you know, off balance sheet place to store cash. It's not gonna show up cash value inside of your life insurance, it's not gonna show up on a public, publicly disclosed balance sheet or anything like that. And so uh similarly, if you have a loan against the cash value inside the policy, that does not show up on your personal financial statements, similar to what a conventional loan would. Okay, and so there's some privacy there. Um next, we're gonna talk about estate planning and legacy planning, okay? Um specifically the tax-free death benefit that comes along with the whole life insurance policy. Life insurance policies all offer a death benefit which is paid out to the beneficiary on a tax-free basis for people with larger estates. This death benefit can be structured in order to help cover estate taxes. It can equalize inheritance between uh the beneficiaries or heirs. Uh, it can also provide buy-cell funding for any business holdings that somebody may have. Um this gives both the policy owner and his or her heirs some peace of mind, right? Um, knowing that the estate is protected no matter what happens. Additionally, having that guaranteed death benefit available can give another sort of peace of mind. A lot of people go through their entire working life uh saving up their nest egg for retirement, and then they get to retirement and then they're worried about spending their retirement because they want to make sure that they leave some for the next generation. Well, knowing that there's a tax-free death benefit sitting there at the end of your life can also give you a peace of mind that says, okay, I can enjoy this, I can spend some of this without having to worry about making sure it's all there for somebody at the end. Um it can it can allow you the freedom to live your life in retirement, right? And that's that's a big piece of why whole life insurance uh can be a great piece of your overall overall portfolio. Okay, lastly, and this is a little bit more advanced, um generational family banking strategies are a thing that sometimes people can use. Some people, families who have uh trusts set up, can use a family bank that each generation can have access to. They can use that that family bank for uh borrowing against the cash value in order to start a business venture or seek an education or purchase a piece of real estate, and they can do all of this while keeping the capital growing um inside of that whole life insurance policy. And then as their business venture pays back, uh they can pay back that loan and free up that cash for somebody else to use. This creates a structure for a family that that gives disciplined multi-generational wealth rather than simply leaving a one-time inheritance, whether that's through you know uh what's left of a 401k or um you know any other retirement assets that you may have. So as you can see, if you go back and and watch all three parts, there's a lot of benefits for keeping money inside of a whole life insurance policy, not just for use and access today, but also as a strategy as you plan for the future for future generations, and you can find a way to set up the next generation in a positive light without having to sacrifice living your own life today. So we hope you've enjoyed this. Please uh like and subscribe and um share this video with your friends. We would love uh for more people to know about these strategies, and I'm gonna continue to pull the string on a lot of these ideas and go into more depth over time. Until next time, out