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Sunday, March 24, 2013

Want to leave a financial legacy to your children and don't have the investments or assets to do so?

Consider what I like to call the poor man's legacy; NO real estate, investments or assets to manage or move from tax shelter to tax shelter and NONE of the resulting headaches!

Life Insurance, in particular whole or permanent life is the best vehicle for the average person wanting to leave something to their children; like the rich do without the headaches. Presently in the U.S. Life insurance proceeds do not go through probate, are not taxed and your heirs have access to their “inheritance” within a few weeks not months or years.

Be your own banker: whole life builds a cash value that you can access without having to crawl and beg to a loan officer for the funds to fix a leaky roof or your automobile.  

Manage your own pension fund: Whole life can be used to supplement retirement income like a pension where you withdraw a set amount monthly or annually. Keeping in mind any amounts withdrawn from the cash value will be deducted from the death benefit should you die without putting the funds back in. For example if you have a $50,000 policy and you have withdrawn $10,000 of the cash value and die suddenly the death benefit is reduced to $40,000 for your beneficiary. 
To use as a pension you should start your policy at a young age and infuse it with extra cash each being careful not to exceed the '7 pay limit'. The illustration that you get when purchasing your policy should indicate what that amount is. If it does not – ask for it!

Level premiums for life: The great thing about whole life is your premium amount NEVER goes up no matter how old you get. Whole life premiums will be higher then Term Life for your age and health but as long as you keep paying them and as you age they do not increase! Term insurance premiums increase as you age and eventually become cost prohibitive after age 65 and unless you have purchased a return of premium policy you have nothing to show for them and certainly not life insurance for your old age or as a financial legacy for your children. Whole life premiums stay the same for life. Hence the term “whole life”.

Mortgage Protection Life Insurance is a Term Life Insurance policy that that has special riders that provide for your mortgage payment to be protected if you become disabled or unemployed.
Term Insurance is pure profit to the carrier as the majority of term policies are never paid out. Most are cancelled due to the increasing premium costs long before the policy owner dies. Term Life has it’s uses for short 'term' protections for debt and income replacement when you have young children at home or other short term debt obligations. Term can serve to give you peace of mind that your family won't face financial ruin should you die. Term unlike whole life is not life insurance that will be affordable in your old age.

"A good man leaveth an inheritance to his children's children:" Proverbs 13:22 KJV

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