The Whole Story Of ‘Financial Security Insurance’
December 17, 2019 by Herbert K. Daroff, J.D., CFP, AEP
In a world of economic (tariffs, etc.) and political (Brexit, etc.) turmoil, including changes in income taxes and estate taxes, an urgent question to pose to your clients is: what is going to happen to your children’s (or grandchildren’s) education funds, your business, your retirement savings? Within the answer to this question lies an important fact: whole life insurance dividends and cash value have stood the test of time.
Think of a particular country’s military knife with multiple blades:
One blade is the cash value
Compare today’s low interest rates on cash (which are taxable, too) to the internal rate of return on cash value (accessible tax-free) funded with dividends from insurance companies that have consistently paid dividends in up markets and down. Cash value is a great alternative to cash in the bank. As interest rates rise, the value of bonds declines. However, as interest rates rise, the dividends paid on cash value also tend to rise. Cash value is like a personal Roth account or 529 education savings plan, without the contribution and distribution limitations. After-tax dollars grow tax-deferred and are accessible tax-free, for any purpose, not just for education or retirement.
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