Why would someone who is Wealthy buy life insurance?

… because they can.

The reality is if you are Wealthy, you probably don’t “need” it BUT… if you think your net worth will stay the same or you will die with money still in the bank, you may “WANT” life insurance and this is how it works.

Consider carving a small sliver out of your net worth each year. This is the annual deposit into a life insurance policy. That policy could have an exponential death benefit growing as the years go by.

As long as you’re still spending on what you want when you want and your lifestyle is not impacted due to the annual deposits into the insurance, this is a win-win.

Behind the scenes you are being strategic by moving some of your net worth into another bucket called permanent life insurance. That life insurance benefit pays out to your family way down the road at a level that is greater than your original net worth before you had the policy – you have magnified your net worth to provide options and significant equivalent rates of return to your plan.

USE LIFE INSURANCE TO CREATE AN ASSET – NOT AN EXPENSE

https://www.youtube.com/watch?v=RNdgeZhr0T0

Have Someone Else Pay Your Taxes

If the taxman is going to be coming when you die (your accountant or I can tell you if you will owe taxes on death), that policy could be used to pay your CRA bill with cents on the dollar. Your family will not have to sell any of your assets to fund the tax bill. Don’t pay CRA more than you have to, give your children more, get an equivalent guaranteed rate of return and/or make a significant difference for a charity… seems like a Win Win Win Win.

Support Articles:

Business Insider Magazine – One type of commonly recommended insurance usually makes more sense for the rich

FORBES – Is Life Insurance An Investment?

BDO Canada – What life insurance products should I consider – Permanent life insurance explained

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