Build Generational Wealth with Life Insurance

Life insurance is a way to build wealth by using a life insurance policy as a transfer strategy to your next generation. A policy can cover more than just a funeral, but mortgages, debts and daily expenses. 

Building generational wealth goes beyond simply building up a retirement fund or a stock portfolio to pass on to your heirs. Generational wealth serves generations of your family now and long after you’re gone.

HOW DOES LIFE INSURANCE WORK?

Life insurance policies have three main characters: 

1. An owner or policyholder.

2. The person whose life is insured. This is often the policyholder, but it doesn’t have to be.

3. The beneficiaries who receive the death benefit. It can be one or more than one.

Life insurance provides a death benefit to the beneficiaries when the insured person dies; this is done in exchange for premium payments from the policyholder. Because your risk of death increases as you age, life insurance tends to be cheaper if you purchase it when you’re younger.

BUILDING GENERATIONAL WEALTH

Rachel Marshall, the co-founder of The Money Advantage, is a proponent of whole life insurance, and she has a personal tale behind it.

“Life insurance isn’t a need product; it’s about creating everything you want for your family. And it isn’t just for a what-if scenario; it’s for when,” she said. “My near-death experience showed me that death is a reality we all will face. We don’t know when.

“If you have a whole life policy, you guarantee that whenever you graduate from this life, you’ll leave behind the greatest gift of love so your family can live out the dreams you planned together — whether you’re there for them or not. For me, whole life insurance is peace of mind that no matter whether I live until tomorrow or until I’m 112, I will deliver the greatest legacy possible to my children — supplementing all the other assets I built during my lifetime.”

Marshall said whole life insurance does double duty.

“All along the way, I have a place to store cash and use it simultaneously, so my money is working in two places at the same time,” she said. “I get tax advantages that (keep) my wealth intact, and my children won’t pay income tax on the death benefits, so they’ll have as great a financial inheritance as possible.

“And, because the death benefit is always more than you’ve paid in, when the life insurance check is used to buy more life insurance in each generation, you create the foundation for tremendous generational wealth.”

HOW TO USE YOUR LIFE INSURANCE

Life insurance can help efficiently maximize the distribution of assets to spouses or partners, younger generations, and charities. A will and/or a trust can assign these assets to beneficiaries. However, these estate-planning tools are not designed to create wealth so much as they are to preserve it.  

If you don't have a lot of wealth built up or are looking for a plan to build wealth for your family, then a wealth transfer strategy using life insurance products may be one of the few ways to instantly create wealth and increase the amount passed on to a recipient or beneficiary.

People of all ages use life insurance for different needs. Learn more about different types of life insurance products with examples of how you can use life insurance at different life stages here.

OTHER LIFE INSURANCE BENEFITS

Life insurance has other practical benefits that can assist you during your life and help your heirs after you’re gone, said Tanya Taylor, a financial coach in New York City and the founder of Grow Your Wealth.

“The death benefit can be used toward paying off your estate taxes, instead of selling assets,” she said. “Death benefit can also be used to pay off debt and help with final expenses.”

Additionally, she said, if you own a whole life policy, you can take cash out if you are short of money or impacted by volatility in the stock market. If you own a business, life insurance also helps with succession planning.

• Generally, life insurance payouts aren’t taxable, making them an attractive alternative for those looking to leave their family money.

• If you invest a life insurance payout and that money earns dividends, it’s important to know that amount will be taxable, so keep that in mind when planning investments.

• To calculate the right amount, you’ll need to consider if you have any debts, educational expenses, house payments, living expenses, and funeral expenses that will need to be accounted for first.

• Conventional life insurance offers lump sum payments, which will likely need to be invested and will generate higher taxable interest than smaller payouts that you receive over time.

To maximize the benefits of your life Insurance Policy strategy, talk to one of our consultants. In conclusion, life insurance can in fact help you pass down generational wealth for your family, as long as your death is while your policy is active.

5 Things Every Single Parent Should Know About Life Insurance

Being a single parent is one of the toughest jobs out there. You’re responsible for the care of every aspect of your child's life. And hoping for the best isn't an ideal strategy.

Being prepared for the worst is where Life Insurance comes into play. This is how you can ensure your kids will be okay if something terrible were to happen. Here are the biggest advantages of Life Insurance as a single parent:

Why life insurance is essential - Life insurance is what is needed to provide financial security for your child in case of a death. 

What life insurance can cover - There is a wide range of how funds can be used to assist with living expenses such as your mortgage or rent, debt, education costs, and more can all be covered.

How much life insurance do you need - Everyone's needs are different, so we will work closely with you to ensure you have the coverage necessary for the right price. 

Who needs to help when you're gone - Whomever you plan to take care of your children when you are no longer around needs to be a trusted person who can receive the money and use it to take care of your kids.

Updating the policy over time - As your life changes, it is essential to review and update your policy to ensure that your children's needs are taken care of when you're gone.

No one likes to think about their own passing, but it's important to protect your loved ones in case something happens to you. It may seem like an unnecessary expense, but if something happens to you, your family will be financially taken care of. So take the time to get life insurance, and give yourself and your family some peace of mind.

Why is Condo Insurance Essential?

Condo insurance, also known as HOA insurance or condominium insurance, is a type of insurance policy that specifically covers the interior of a condominium unit and any personal property within it. It is designed to protect the individual unit owner from financial losses due to damage or destruction of the unit or personal property, as well as liability claims resulting from accidents or injuries that occur within the unit.

There are several reasons why condo insurance is important for unit owners:

1. It covers damages to the interior of the unit: Condo insurance covers damages to the interior of the unit, such as walls, floors, ceilings, and fixtures, as well as any personal property within the unit, such as furniture, electronics, and appliances. This can provide financial protection in the event of a fire, natural disaster, or other unexpected event that damages the unit or personal property.

2. It provides liability protection: Condo insurance also includes liability coverage, which protects the unit owner from claims made against them for accidents or injuries that occur within the unit. This can include medical expenses, legal fees, and damages resulting from the accident or injury.

3. It can cover additional living expenses: If the unit becomes uninhabitable due to a covered event, condo insurance can provide coverage for additional living expenses, such as temporary housing or hotel costs.

4. It can help with assessments: Many condominium associations have an assessment policy in place, which requires unit owners to contribute to the cost of repairs or renovations to common areas or amenities. Condo insurance can help cover these assessments if they are not covered by the association's master insurance policy.

In summary, condo insurance is an important form of protection for unit owners. It can provide financial security in the event of damages to the unit or personal property, as well as protection from liability claims. It can also cover additional living expenses and assessments, helping unit owners to manage the financial impact of unexpected events.

Winter is Coming…Is Your Car Insured?

You know the drill - it's cold outside and you need to get your car ready for winter.

But what about all the things that can go wrong during winter? From frozen fuel lines to road salt damage, there are a lot of potential problems your car could face this winter.

Keep your car running smoothly and prevent winter-induced damage by following these recommended maintenance tasks:

Change your regular tires for winter tires: If you live in an area where the temperature drops below 45 degrees, winter tires are recommended. Winter tires will give your vehicle better traction while turning or stopping on icy roads.

• Check your tire pressure: When temperatures drop, the cold air inside your tires contracts, making your tire pressure drop. Be sure to check your tire pressure as temperatures fall.

• Add antifreeze: Antifreeze is essential in helping keep your car running when temperatures drop. You can check your antifreeze levels yourself or ask your mechanic to check your fluid levels as well.

• Keep up with regular maintenance: Oil levels, lights, fluids and more should be checked with regular maintenance upkeep. Be sure to stay on schedule with recommended car maintenance, especially during the winter.

• Test your battery: Colder weather creates more challenging conditions for your battery’s performance. A weak battery during the summer could turn into a dead battery in the winter. Have a volt test performed before winter arrives to be sure your battery is in good shape.

• Pack a survival kit: Emergencies can be unpredictable. If your car breaks down on the side of the road during a winter storm, you don’t want to be without essentials. Essentials to include are a blanket, extra clothing, a first-aid kit, a knife, a flashlight, jumper cables, a shovel, an ice scraper and a cellphone charger.

During the winter, driving can be dangerous if you and your vehicle are unprepared. At Sanders Insurance, we want to be sure you're prepared for whatever winter weather throws your way.

Why Basic Homeowners Insurance isn’t Always Enough

You don't want to get caught paying too much for your homeowners’ insurance. As a rule of thumb, make sure that you're always up-to date on what's necessary and file any claims immediately so they can be paid as quickly as possible!

We know that you care about your home and family, which is why we offer multiple homeowners policy options. You may benefit from additional coverage if any of the following apply to you:

• The cost to completely rebuild your home is between $500,000 and $3 million.

• You have a custom-built home.

• Your home has marble countertops, custom cabinetry, high-end appliances or electronics, valuable collections of various kinds, or similar amenities.

• You have substantial financial assets to protect.

• You have additional or unique risk exposure.

Homeowners’ options give you the flexibility to easily add affordable comprehensive coverage to your policy without confusing endorsements or other complications. These valuable options include:

• Extended dwelling coverage. Full reconstruction costs are often different than market value, so your current homeowners policy may not accurately reflect the true costs of rebuilding your home. Extended dwelling coverage helps you rebuild if construction or permitting costs change and add up to more than your current policy limits. It may also pay for debris removal, contractor costs, construction fees and permits, architect's fees, and other expenses.

• Building ordinance or law coverage. If your home needs to be rebuilt or repaired due to a covered loss, you’ll have to build according to current building codes. And since codes change, this could mean higher costs than expected to rebuild. Building ordinance policy, or law coverage, exists for just such scenarios — and it could save you thousands.

• Replacement cost up-front coverage. This loss settlement option allows you to choose not to rebuild at the original location following a covered total loss. In this case, you’ll get a payout to apply to the purchase or construction of a new home in a new location.

• Personal property replacement cost coverage. This helps cover the costs of replacing personal property, such as electronics, art, jewelry, and furniture, with no deduction for depreciation. So you’ll get the amount needed to buy an identical or comparable item rather than settling for something of lesser value.

• Personal offense coverage. This offers you broad protection against a variety of lawsuits and damages related to libel, slander, defamation of character, invasion of privacy, and other offenses. This may include comments made on social media by either you or your children.

Is your homeowners policy up to date? If you’re unsure or if you’ve outgrown your current coverage, contact your local Sanders Insurance agent to discuss your situation and get the protection you truly need.