Inherit in its risk and return characteristics, life insurance is a powerful asset that should be included in your client’s financial portfolio. It is arguably the best insurance policy concerning returns. It is because of this and other reasons that make life insurance a viable asset. Here are some of the other reasons:
Predictable value
Life insurance policy comes with a lifetime annual internal rate of return which makes it a viable asset that many clients can take advantage of.
Superior, safe results
Typically, the life expectancy is between 84-87 years. This provides 6-8% tax-free IRR. When compared to an ordinary investment vehicle, there are few investment vehicles that will give you such a return.
Value not directly linked to market performance
Insurance companies can customize the life insurance policy depending on the client’s needs. It can be adjusted not to rely on the market performance. This means that you can get higher returns than the ongoing market price.
It ensures the client’s legacy.
This is the best policy to ensure that your legacy is carried on to your children and other dependants. If you want to leave something for your children to inherit, this is the best policy to take. It only matures when you die.
Liquidity
This policy can be converted into cash once the policyholder dies. It cannot be reduced by commissions, transfer costs, fees or taxes. If you decide to get policy cash surrender, you can at any time.
Growth
The good thing about life insurance policy is that the benefit amount can exceed the actual cost of acquiring it or the costs of maintaining the policy. This policy does not entirely depend on the market forces, and it can provide a competitive return.
Versatility
You can use life insurance policy to increase your financial security. This means that you can improve your financial portfolio without worrying about inherent risks or factors that can prevent you from achieving your financial goals.
Avoids probate
Life insurance can be delivered to the beneficiaries as a whole without any charges or going through probate. This means that your children and other beneficiaries will get the inheritance in the shortest time possible.
Income tax-free features
You can obtain the life insurance policy inside your pension plan without it being affected by the income tax. This means that it will not be subjected to income tax even when you pass on.
May avoid estate taxes.
A vast number of people take life insurance policies to avoid estate taxes. No other asset can give you this immediate tax reprieve.
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