- December 17, 2008
- Posted by: Brian Poncelet
- Category: Approved
Suppose you could do the same with your insurance policy? If you set up the insurance policy right, you can pay cash for the car. Then you would pay yourself principal and interest (what you would have paid the bank) back into the insurance policy the money grows at a rate much higher than the bank would offer. You could take it one step further, do you have auto insurance? Do you have a deductible? If you increase your deductible or better still get rid of it you may save $500 or more on your insurance every year (depending on the year and make of the car) Take that $500 of “found money” put it into your tax free sheltered insurance policy (read more below) and watch it grow! Remember, if you where in an accident you would still have to pay the deductible out of pocket! For a newer car just by increasing the deductible by a $1,000 the savings is impressive…just remember is put the “found money” to work not spend it!
Participating policies (whole life is misunderstood by many people, media, financial planners and insurance agents!)
How does it work? The insurance company invests a pool of money conservatively as an example: about 20% in stocks and 80% in high grade bonds like government and corporate. Mortality rates (when policy owners die). In every decade over 100 years people are living longer. Expenses, taxes, administration fees. Death benefits to beneficiaries. Premiums collected. Policy loans outstanding. All of this is factored in an dividend is paid like it has for over 100 years which of course varies from year to year but is much higher than any 5 year GIC that can be bought.
What if I am uninsurable?
Case study: Father is 50 years old and not insurable or highly rated. He has a daughter who is 23 years old and in good health. Money can go into her policy, but the father is the owner. He would like to have some tax free income starting at age 70. he puts in $20,000 per year for 20 years. At age 70 he pulls out $28,500 per year until his death at age 85. The cash value of the policy which includes the accumulated dividends is $1,110,726 this goes to his daughter at his death. She still a insurance policy on her life of over $1,000,0000 at age 57 no additional premiums need to be paid by here for the rest of her life. Assuming she dies at age 85 the insurance pays out over $2,000,000. Both father and daughter win.
Please call me for your own illustration or situation.