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Napa Valley Wealth Management - St. Helena, CA

Benefits of Life Insurance

Ways life insurance can help you save money and create wealth. 

This isn't your father's insurance. Life insurance products have significantly changed and today are cheaper and more flexible than 10 years ago. If you bought insurance before 2000, it's a good time to look again.

If your family relies on income, you'll want to first ensure you have enough life insurance coverage to provide for them should you pass away. Less than half of U.S. households say they have life insurance in place*. Make this part of your long-term, wealth-protection strategy first. Here's how to assess how much coverage you need.

Next, life insurance products can be used in a variety of ways to help you save in taxes, support your favorite charities, or plan for your business's succession. Here are a few ways life insurance can help you achieve your goals.

  1. Save taxes: Insurance can be a great way to save income and capital gains taxes for individuals and business owners. 
  2. Business succession: Life insurance can be a valuable addition to your business succession plan. The wealth of many business owners is tied up in the business and is illiquid—hard to access for a surviving spouse or children. Using a succession buy-sell agreement that funds life insurance on the owner can help keep the business running and support your family.
  3. Charitable giving: Want to replace the money you gave away? If a charitable gift is structured properly (i.e., Charitable Remainder Trust or gift annuity), it can provide income that you can use to purchase a life insurance policy, which would pass to your beneficiaries, effectively replacing the charitable gift.
  4. Estate planning: Use insurance to help pay estate taxes. For families whose money is tied up in hard-to-sell assets or even assets they want to keep in the family, such as real estate or a business, where do they get the money to pay the estate tax? Solution: Use insurance to give your heirs the cash they need to pay Uncle Sam and keep the asset.
  5. Treat insurance as an asset: If you have a policy you don't need anymore, you might be able to sell it for more than its cash value.

Interested in learning more? Let's talk.

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* according to a study conducted by LIMRA.