Wealthy People Buy Permanent Life Insurance
Term Life Insurance or Permanent Life Insurance (Whole Life)? Can you afford permanent insurance? Most people can’t.
Should you buy permanent life insurance? Only you can answer that question. Do you want to provide a tax free benefit to your wife, children or business upon your death, whenever that may be, no matter what? If you answer yes, you should only buy a permanent life insurance policy. The premium for permanent life insurance is higher, it does not “cost more”. Most people who buy life insurance do not have the necessary cash flow to purchase permanent life insurance. As a result, they have 100 reasons for why they don’t buy it.
Whole life insurance is not better or worse than term. Term insurance is not better or worse than whole life. Most journalists, financial planners, CPAs, attorneys and insurance people do not need permanent life insurance because they do not wish to carry life insurance until they die, no matter what. All you have to do is ask that simple question. You will quickly realize their needs are much different than yours. There is nothing wrong or right about that; it just is.
Most wealthy people DO have the ability to pay higher premiums. There is a lot of information “out there” about the right type of life insurance to buy. The advocates for term insurance are typically written by people who do not need or cannot afford permanent life insurance. These term advocates promote the jingle “buy term and invest the difference”. The problem with that concept is this: Virtually nobody invests the difference and it’s not a valid comparison because you cannot buy term in your 80’s or 90's.
Term insurance has a place, no doubt. It is usually to protect your lost income when you are in your income earning years. For most people making less than several hundred thousand per year and a net worth of less than a few million dollars, term life insurance is the right choice.
The following video does a great job laying out the virtues of permanent life insurance for wealthy people.
Originally published at Innovative Retirement & Insurance Solutions.
