Last week’s article was about that poor misunderstood financial creature the whole life insurance policy. This is absolutely one of our favorite wealth management and creation tools and it gets a really bad rap, so we thought we’d share another article from Modest Money that explains 10 reasons the rich use these policies to build wealth (otherwise known as “getting richer!”).
From the article:
“Whenever I hear a financial consultant (or anyone, for that matter) talk about less expensive premiums for term, I know they really don’t understand how this animal of properly designed whole life insurance really works.“
This quote touches on the critical nut of being able to benefit from a whole life policy – it must be properly designed (follow the link for more on that, after you finish reading here of course!). Not having enough cash value up front, not being able to contribute paid up additions, not choosing a mutual life company or choosing the wrong company will all make it nigh on impossible to really benefit from these policies. Educating yourself on how to use these policies is a must, whether you do it yourself with reading, or choose an advisor who can help you, do make sure you understand whole life policies and the infinite banking concept before buying one of these wealth building machines.
One of my favorite “side benefits” of my whole life policy (aside from the policy loan, which is arguably the most powerful wealth building aspect of the product), is the long-term health care rider. I’m of an age where long-term health insurance is very expensive. Fortunately, the policy we purchased had a long-term care rider available, and for a very reasonable additional sum, we were able to add it. So now in the (God willing unlikely) event that I have a long-term illness, I’ll receive the care I need without devastating my family financially.