Buying Life insurance has become the new smart way for the wealthy and savvy individual to amass wealth effortlessly. This is even though one has to wait until death for the life insurance to pay out. Although life insurance will only be paid after one is gone, more and more affluent people in the United States and another part of the world are considering life insurance as a worthwhile part of their financial planning. In case you are wondering why the wealthy have come to so much fall in love with life insurance covers, here are some compelling reasons that apply to many and not only the rich.

It is a great way to boost investment returns

With a life insurance policy, the money you invest continues to accumulate on a tax-free basis. This translates into the your getting more returns from the money spent while paying no taxes. Besides growing your invested money on a tax-free basis, the life insurance policy also allows you to borrow at a relatively low-interest rate. Also, the fee charged to manage your insurance policy is quite low, and the returns are fantastic compared to the risks.

To cover anticipated taxes after death.

Since we all anticipate death at some point in our lives, planning in advance is a smart way to ensure your loved and your hard earned assets and established business don’t suffer a massive blow upon your demise. One way to safeguard your illiquid resources against unfavorable taxes is through a purchase of life insurance cover to those anticipated taxes. Therefore, when you finally die, your real estate or business will not run out of money to cover the taxes.

It is a cost-effective and convenient way to leave a legacy for one’s heirs. 

When writing down your will, I’m sure there are some assets you would prefer to leave to one heir and not another. For instance, your businesses. In such a scenario, you may consider buying life insurance cover of approximately the same value as the asset to that particular individual heir. Here, life insurance cover will act as a great equalizer. Therefore, if you want to leave a business worth $1,000,000 to one heir, you can purchase life insurance cover of the same value to the other heir. Basically, you also need to put into consideration taxes affecting the amount inherited by each of your heirs.

Life insurance coverage can act as a security in case you need a loan.

Although borrowing is not for everybody, some situations make it a prudent and wise decision. Just like the way banks leverage on the principal of small margins, affluent individuals can as well benefit from this through life insurance cover. With life insurance, you can accumulate a favorable amount of cash that you can use security to secure a loan. Actually, you get to borrow from the money collected in the life insurance policy at a relatively interest rate. Most wealthy people who are visionary are taking advantage of this to grow wealth tremendously.