Advantages of Whole Life Insurance You’re Not Supposed to Know

https://www.youtube.com/watch?v=bK6cj5VH4_k Most people miss the advantages of whole life insurance because they view it as strictly an insurance product that doesn’t do anything else. But it’s that perspective, not the product, that has the limitations.Do you need to get the highest-quality life insurance you can count on, but you feel like life insurance agents are conspiring against you and sabotaging your success? Do you have questions about the advantages of whole life insurance, or maybe you need some tools to help you? Well, look no further because this article will explain the various whole life insurance advantages, without you having to compartmentalize it as just buying death benefit, separate from the rest of your financial life. Best of all, these seven benefits of whole life insurance will put you on the fast track to success with your life insurance right now. Table of contentsWhere Do the Advantages of Whole Life Insurance Policies Fit in the Cash Flow System?Advantage of Whole Life Insurance #1: Vault-Like SafetyBuilt-In Strength: Reserves and ReliabilityAdvantage of Whole Life Insurance #2: Competitive Growth on Cash ValueWhy Results Vary From Policy to PolicyAdvantage #4: Tax SavingsAvoiding the MEC TrapAdvantage #5: Gateway to Income-Boosting StrategiesSpend More, Worry Less in RetirementAdvantage #6: Privacy from Creditors and LawsuitsAdvantage #7: Legacy PreserverPros and Cons of Whole LifeFind out MoreFAQs About Whole Life Insurance AdvantagesWhat are the main advantages of whole life insurance?How do the benefits of whole life insurance compare to term life insurance?Can the cash value be used while I’m still alive?Are there tax advantages with whole life insurance?Is whole life insurance worth the higher premiums? Where Do the Advantages of Whole Life Insurance Policies Fit in the Cash Flow System? Life insurance coverage in itself is just one small part of the bigger journey to time and money freedom. That’s why we’ve developed the 3-step Business Owner’s Cash Flow System. It’s your roadmap to go from just surviving to a life of significance, purpose, and financial freedom.  The first stage is the foundation.  You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable.  Then, you protect your money with insurance, legal protection, and Privatized Banking.  Finally, you put your money to work, increasing your income with cash-flowing assets. That being said, whole life insurance designed for early cash value AND long-term growth fits the protection layer of creating wealth. At the same time, the Infinite Banking Concept improves every other area of your financial life. Advantage of Whole Life Insurance #1: Vault-Like Safety A whole life insurance policy is a savings vehicle, not an investment product. You can compare it to other savings tools, like checking accounts, savings accounts, money market accounts, and CDs. Similarly, a whole life policy’s cash value is safe because it won’t drop in value. This matters because your cash value is impervious to market crashes and corrections. It won’t drop in value unless you take the money out. And if you take a peek behind the curtain to compare whole life insurance companies to banks, you’ll be impressed here, too. Built-In Strength: Reserves and Reliability Life insurance companies can make these profound guarantees mainly because of their long-term conservative investment strategy and their strong reserves. While many banks are required to keep only 10% in reserves, life insurance companies have more than 100% in reserves. Notably, banks failed 27 times more than insurance companies during the years between 2005 and 2017. During those 12 years, there were 523 bank failures, while only 19 life insurance companies became insolvent. And those companies were small, poorly rated companies. The highly rated companies have stood strong for well over 100 years, through multiple economic crises. Like the FDIC, which insures bank deposits up to $250,000, each state has a Guaranty Insurance Fund (GIF) that insures insurance. This level of long-term security is one of the practical advantages of whole life insurance — especially when compared with traditional savings tools. Top that off with ensuring you’re working with the highest-rated, best life insurance companies. Then, you can be doubly, triply sure that whole life cash value is a savings tool that will guarantee your dollars will be there for you. Advantage of Whole Life Insurance #2: Competitive Growth on Cash Value A properly designed whole life insurance policy doesn’t scrimp on returns. In fact, when compared to other savings-type accounts, its guaranteed cash value benefits can often outperform traditional options over the long term. But most people wouldn’t know that, because typical advisors don’t usually design insurance as savings tools. In fact, when comparing premium payments with your resulting cash values in, say, year 20, whole life insurance policies typically yield an internal rate of return between 3% and 5%. That means that it would have required a consistent, positive, compounded growth rate every single year to turn the cash outlay into that account value. Why Results Vary From Policy to Policy Now, exact cash value growth, in terms of rates, can vary from whole life policy to whole life policy based on age, gender, and habits. But here’s what does matter: the return is after taxes and fees, and it’s in today’s low dividend-rate environment. Historical returns on whole life have been even higher. Let’s put this in perspective. If you could get a 3% internal return in whole life insurance, compared to a 0.25% return in a cash savings account, that’s a full 12x higher return. Not too shabby! And bonus points for whole life insurance: when you access your cash value through policy loans, all of your money keeps growing at compound interest, even while you use your money at the same time.  That kind of uninterrupted growth and flexibility is one of the overlooked advantages of whole life insurance — especially when compared to low-yield savings accounts or taxable investments. So, not only is the whole life’s internal return competitive with other savings tools, but it’s also tax-advantaged and uninterrupted! Advantage #3: Unlimited Access for Your Lifetime Cash Needs If I’m going to stash my cash somewhere that’s safe and growing, I want to be able to access it so I can use it as well. The great thing about cash value is that it is very liquid. You can use your cash value through loans or withdrawals, and in either case, the life insurance company has a contractual obligation to give you the cash. Here’s how paying back a policy loan works. If you have $50K of cash value, you can request a $50K loan. Then they’ll give you $50K of their money, secured against your cash value. The best thing about this is that a whole life insurance policy loan doesn’t have any stipulations or requirements for what you’ll use it for, or whether you deserve it, or how and when you’ll repay. This means you can take a loan at any time, for any reason, without a cumbersome, time-consuming qualification process. And while it does accrue interest, you can pay it back over any period of time. Freedom to Borrow on Your Terms All in all, that means unlimited access to your cash needs throughout your lifetime. This is important because you can literally use the same money over and over again to pay for college, buy a house, purchase an investment, or anything else you might need through a process of taking and repaying policy loans. And, you can also take your money out directly through withdrawals. In that case, you wouldn’t be able to put the money back, and you would pay tax on anything you withdraw above the amount you’ve paid in. Advantage #4: Tax Savings Tax is such a crucial piece of any financial tool because if you’re not careful, gains can be eaten up by taxes, especially in taxable accounts. One of the distinct benefits of whole life insurance is that it’s one of the only tools where you pay tax once, and never again. We call this the triple tax advantage. Here’s how it works. First, I pay tax on my income before I put it into my whole life policy. Then, I pay premiums. My money grows in a life policy tax-deferred. This simply means that I don’t have to pay tax every year on the growth of my cash value component or death benefit.  It implies I’ll have to pay someday … but if I utilize the policy correctly, I’ll never have to pay tax on that amount of money again. That’s because one of the advantages of whole life insurance policy loans is that they are tax-free. And if I withdraw cash, as long as I don’t take out more than what I paid in, I won’t pay tax on the withdrawal. Then, when my beneficiaries – in my case, my family’s trust – get my death benefit, it’s income-tax free. Avoiding the MEC Trap One other thing. To get this triple-tax advantage, you need to make sure your life policy does not become a Modified Endowment Contract (MEC) by having too much premium and too low a death benefit. It’s one of the few technical areas that can affect the long-term advantages of whole life insurance. You would want to make sure your life insurance is designed to keep your policy on the straight and narrow, not veering into MEC territory.  A policy that becomes a MEC loses the tax-advantaged treatment and would be taxable anyway you access and use your money. That’s why this remains one of the most overlooked benefits of whole life insurance — you pay tax on the seed, and not on the harvest. Advantage #5: Gateway to Income-Boosting Strategies Whole life isn’t just an all-star player; it’s like a magic sauce that elevates the rest of the team as well.