The Benefits of Cash-Value Life Insurance

Permanent cash-value life Insurance is a unique and flexible financial planning tool that should be considered by all families aspiring to achieve real financial independence.  If properly structured and properly funded, cash-value life insurance can provide many exceptional benefits.
Cash-value life insurance offers the advantage of a tax-free benefit and the potential for income tax-free withdrawals and policy loans as long as the policy is properly structured and remains in force. Let’s take a look at the Tax Control Triangle. Assets generally fall into one of three buckets, taxable bucket, tax deferred bucket, and tax-favored bucket. Cash-value life insurance falls into the Tax-Favored bucket. The assets are funded with after-tax dollars. These assets may have the opportunity for growth on a tax deferred basis and the cash accumulated in your policy can provide you with tax free income in retirement (taking withdrawals up to the cost basis and then borrowing the remainder).

 
Along with the tax favored benefits cash-value life insurance provides, it also provides many additional advantages that are not availble in any financial vehicle offered today.

• First and foremost, cash-value life insurance provides your family with the money they might need in the event of a death to replace lost income, payoff mortgages and debts, and to pay any medical and burial expenses as a result of a family member passing away.
• You own the policy instead of renting it; you have complete control.
• You don’t have to requalify for the death protection as you grow older.
• Cash-value life insurance is a forced savings plan. It forces you to pay yourself first.
• Unlike qualified plans, there are no limits on how much you can save each year.
• You have a liquid emergency fund for life’s unexpected events.
• The cash-values can be accessed income tax free and penalty-free prior to age 59  1/2 .
• Cash-value life insurance does not count as an asset when you apply for college financial aid.
• By overfunding a cash-value life insurance policy up to the MEC guidelines, it can become an investment grade life insurance policy.
• Because of the disabilty waiver  of premiums and death benefits, cash-value life insurance is the only self completing savings, college funding and supplemental retirement plan.
• Guarantees: only life insurance and annuities guarantee your investment principal  and offer minimum growth guarantees for the life of the contract.

Beside providing protection for your family, cash-value life insurance is a great savings tool. The unique income tax treatment, safety, guarantees, privacy, self-completion, and ability to use as your own bank make it a valuable addition to everyone’s financial plan.