If you’ve ever considered purchasing life insurance, it’s likely because you want to leave a financial legacy to your loved ones. People always search for new ways to increase their income or wealth, and insurance can be a tool to do that effortlessly.
Why is it important to have life insurance?
Insurance is a huge component of financial planning. It can help you live a happier life by ensuring that you receive financial assistance when bad things happen, allowing you to recover more quickly.
Using life insurance to build wealth means that your family would have financial stability and progress when you’re no longer around. Another reason insurance is crucial is savings. Saving is the first step toward accumulating wealth. An insurance savings plan allows you to withdraw funds to support significant life events without relinquishing your policy.
How to Use Life Insurance to Build Wealth
A life insurance policy is a necessary investment for everyone to give financial stability to their families during life’s uncertainties. The following are ways to use life insurance to build wealth:
1. Choose the right policies
There are several types of insurance plans available. However, to build wealth, endowment policy and money-back policies are at the forefront. You do not only get life insurance, you also get good returns.
2. Use savings plans
If saving isn’t your strong suit, life insurance can help you out. You have access to your policy’s death benefit and can save money that generates interest. However, you can’t withdraw money from an insurance investment until later in life. This forces you to save and let your money compound which can help you in the future.
3. Cash Value
Cash value is the part of your policy that earns you interest. With the cash-value component, you may increase your wealth month after month and save over time. Then, if you want to access the money you’ve saved, you may do it while you’re still living by withdrawing it.
4. Wealth Transfer
With life insurance, you can create and transfer wealth to your children when you’re gone. It is one of the cheapest ways to ensure generational wealth; because, with a little premium, your beneficiaries can receive huge benefits in the event of an eventuality. With an endowment plan, you can set a target sum and whether or not you contribute fully towards the target, if you pass away, that target sum is paid to your beneficiary.
Your insurance can be a tool to build, preserve and distribute wealth as it can be a form of investment. You can treat your insurance as an investment alternative. This is best done by getting long-term insurance savings or endowment policies.
6. Death Benefits
People get life policies so that their families or beneficiaries will receive the death benefit if they die. Some people also make themselves the beneficiary of a life policy on someone else, such as their parents, so that they get the death benefit when the insured person passes away. However, the beneficiary must normally acquire permission from the insured individual and establish an insurable interest to do so.
7. Contingency Plan
A contingency plan ensures that your investments are not harmed in the event of a health or other unexpected incident. As a result, getting appropriate life insurance is a wise backup plan. The amount of life policy you should get should be 10 to 15 times your annual salary. Your insurance coverage should be reviewed and upgraded as your income and lifestyle change.
Insurance can be a good financial planning tool and can also help you create generational wealth. Are you ready to get started with your own life insurance policy? Here at Leadway Assurance, we offer all forms of life insurance including a pre-priced and affordable term life insurance that costs only N10,000 yearly with up to N1,000,000 in benefits; Insurance savings, and investment policies. Looking for something else or not sure of what plan to get? Request a callback today and our team of financial advisors will reach out to you.