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Anyone With an Income or Wealth Should Own Life Insurance

February 25, 2020

I just cringe whenever I hear the following from any financial advisor about life insurance:
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“I do complete financial planning for my clients, but I rarely sell life insurance.”
“When I see the need for life insurance, I offer it to my clients.”
“My clients already have life insurance, or they don’t need it.”
“I don’t have a life insurance license, but when a client needs it, I refer them to an agent.”
“I don’t sell life insurance anymore.”

What these statements mean to me:
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The financial advisor is unwilling to take the time and effort required to incorporate life insurance products into their clients’ portfolios.
The financial advisor is poorly educated on the incredible benefits and features available with modern life insurance products.
The financial advisor has a preconceived notion that life insurance is not an attractive asset class (again, this is due to a lack of education).
The financial advisor is only focused on gross returns versus net returns (net returns = after taxes and management fees).
The financial advisor is solely focused on maximizing fees and getting assets under management (AUM).

The bottom line is this: every successful person should own life insurance because virtually every successful person deals with at least one of the issues below.

Death Benefit Needs:
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Income replacement
Spouse, children, grandchildren, or parents who are dependent on you
Debt payoff (mortgages, business loans)
Business continuation (like a buy-sell agreement)
Key person coverage
Estate equalization
Pension maximization
Estate taxes
Divorces
You want to leave a legacy.

Living Needs

Long-term care protection (hybrid life insurance policy)
The odds of needing long-term care are over 70 percent, yet most people don’t have insurance to cover this.
Why sell assets, pay taxes, and then pay for your long-term care needs when you can get this protection for just pennies on the dollar?
Executive benefits and golden handcuffs
Alternative asset class or supplemental retirement plan
Tax diversification
Liquidity
Tax-free growth and tax-free income
Access to tax-free money prior to age 59 1/2
Manage portfolio risk
Non-correlated asset class with great internal rates of return (IRR)
Absolutely no contribution limits

Think about it this way: how many Super Bowl championships would you in if you had the #1 ranked offense but the last place defense in the league? I’m thinking none. Owning a good life insurance portfolio, that’s the same as having a top-ranked defense.

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