There typically comes a time as people get older when they start thinking about future generations and the legacy they will leave behind. Often times after strategic planning people have more than enough in retirement and get to a point where they begin contemplating how they can pass on their wealth in efficient ways. Whether the amount is a little or a lot, leveraging a guaranteed death benefit for a smaller premium becomes a viable option.
Along with careful planning, some people like to set aside funds that will pass along to children and grandchildren. Death benefit proceeds are passed along to whomever the policy owner designates as the primary beneficiary(s), and generally accomplishes this in a tax-free manner. Another advantage to transferring wealth through life insurance is simplicity, the beneficiary will receive the death benefit proceeds directly from the life insurance company which typically takes a week after the insurance company receives the insured’s death certificate.
- Immediate death benefit protection. Death benefit protection that will be paid out to beneficiary(s) upon death.
- Income tax-free transfer to heirs. Death benefit passes generally income tax-free to heirs.
- Leverage. Premium payments can provide a larger death benefit immediately after issue. Premium dollars are leveraged immediately into the full death benefit. These premium dollars purchase a face amount that would be available upon death.
- Tax-deferred growth. The premium payments into a permanent life insurance policy earn interest and grow on a tax-deferred basis.
- Liquidity. If needs change or in an emergency, there can be access to funds in a life insurance policy through loans or withdrawals.