Why Are Wealthy People Buying So Much Life Insurance?

AccuQuote Life Insurance · 19,435 views
Watch Why Are Wealthy People Buying So Much Life Insurance? video. The Why Are Wealthy People Buying So Much Life Insurance? video uploader AccuQuote Life Insurance says about, The "Rich" theoretically don't need it, right? Yet they are the biggest buyers of life insurance. Do they know something you don't? Maybe. One thing's for sure...they're usually pretty good at math!



Here’s a question I get asked all the time: Why do so many wealthy people buy large amounts of life insurance when they clearly, or at least ostensibly, don’t need it?

The answer is simple: Wealthy people are usually pretty good at math. They’ve crunched the numbers and figured out that if they just make sure to hold onto their policy until they die, the rate of return on their premiums, at death, will be higher than any other safe, conservative investment they could make. In fact, it’ll even beat many of their more risky investments, without having to take the risk.

To them, it’s just another asset class. Let’s face it, every investment advisor or money manager on the planet always recommends diversification. As we all know, that means not putting all your eggs in one basket. You might own some stocks, but not all one stock. And not just stocks, but some bonds too. Perhaps some real estate, precious metals, commodities, maybe even some cash. And if it’s all done perfectly, given enough time, theoretically, by diversifying, your returns should be steadier… and given enough time, all should be fine in the long run.

But what if you die earlier than you plan to? No one expects that to happen and we don’t want to think about it, but it happens to people every day. TIME then is a key component to the success of any financial plan. Investments need time…to grow.

Your portfolio is probably diversified to protect against a whole raft of risks, many of which will never come to pass. For example, some of us own gold as a hedge against a currency devaluation, which may or may not happen. But remember, death too… is a risk to your portfolio… and your plan for your family… but unlike the other risks, death is a certainty. Doesn’t it make sense to diversify your portfolio against the possibility that you might die early? I call this TIME diversification.

The fact is, if you die young, there is simply NO asset class that’ll even come close to outperforming a life insurance policy. And, if you die when you’re supposed to, right around your life expectancy, the rate of return is still around 6% after tax, that’s an 8-12% pre-tax equivalent depending your tax bracket, which beats virtually every other safe investment on the planet.

The best part is that unlike any other type of financial instrument, life insurance doesn’t need time to grow. For example, say you’re age 55, and you buy a $1,000,000 life insurance policy for $10,000 a year.

If you die next year, the $10,000 instantly turns into 1 Million dollars. Die in 3 years, $30,000 in premiums will have turned into 1 Million dollars, tax free. Die in 20 years, and you will have turned $200,000 in premiums into $1,000,000. In fact, it’s almost impossible to fathom a scenario where you could live too long, and turn it into a bad deal.

So that begs the question…. should you consider taking a small slice of your portfolio and diversifying it into life insurance, as an asset class? That’s up to you … but I know I did!

If you have any questions, or want to see the specific numbers in your case, so you’ll know exactly how this works, give us a call at the number on your screen.

I’m Byron Udell, Founder and CEO of AccuQuote, and you can ask for me personally. Or you can go to AccuQuote.com to learn more.tcVKDtyR-KI