Monday, August 22, 2011

Financial FICTION #5: Investing in a life insurance policy is savvy only for folks with dependents at home

Financial FICTION #5: Investing in a life insurance policy is savvy only for folks who have dependents still in their nests.
Some financial experts hold a general belief that once you no longer are responsible for any dependents, you should drop your life insurance coverage, because from that point onward, it’s a waste of your money, so to speak. The rationale appears to be “Why pay for income replacement that no one needs?”

Once again, I beg to differ – completely. You see, that general view does not hold true and/or make sense in more than 99.99 percent of the situations I have reviewed with my clients – once they understood the complete life insurance picture. Here are some key facts to consider:
  • Some life insurance products, when designed properly by your advisor (how the policy is designed is extremely important) can build cash value that you can access anytime without creating what the IRS calls a taxable event, thereby allowing you to enjoy your money completely income-tax free.
  • Cash buildup inside these kinds of life policies is not subject to the “Required Minimum Distribution” rules that accompany certain plans, once you reach age 70½ and beyond.
  • Life insurance death benefits under U.S. tax law pass to your named beneficiaries completely income-tax free.
  • Life insurance is the only financial product that can guarantee a specific amount of money will be paid to your named heirs for pennies on the dollar, come-what-may – and they won’t have to pay even a cent of income tax.

I would challenge any financial professional to first understand the intricacies of each client’s specific situation before jumping on a general bandwagon or falling for some emotional selling point that holds no merit. Then I would suggest they compare the alternatives to determine whether they can and will beat the life insurance option, in terms of cost and final benefit. Then, put that side-by-side cost-benefit information in front of their client. The rest seems pretty easy, doesn’t it?

What I have come to notice personally is that many so-called financial professionals dismiss life insurance alternatives without even looking into them, or they do so based on what they’ve heard someone else say. Many of these critics don’t even hold life insurance licenses – yet they are experts in the subject?

Not all life insurance products are the same. Just as it would be irresponsible for me to tell you that because I had a terrible adverse reaction when I took aspirin, “Aspirin simply doesn’t work,” an advisor who ignores insurance is not giving you the complete picture. It’s up to you to learn to read between the lines.
Contact a financial professional at Laser Financial Group today to schedule an appointment to discuss the best financial options for YOU. If an insurance plan would - or wouldn't benefit you, we'll let you know. 301.949.4449 or


  1. thank you!...and most of my people are so misinformed about life insurance and would not even take them for $10 a month. Death is real and there's nothing wrong with preparing yourself so your kids and family do not have to end up in debt for your funeral...just saying literally


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