A good financial plan is an essential step toward wealth management, providing for your family and planning your legacy. Preparation and process are critical to creating a plan that can support your long-term financial goals. Risk management is key to any financial plan, and while it can’t be eliminated, one way to allay your risk is through diversification.
With a market awash in products, there is no one-size-fits-all financial plan. But, for those who spend a lifetime building wealth, protecting what they’ve worked hard for is a priority.
Life insurance may not be top of mind when most people think of financial planning, but a well-structured life insurance policy can offer many advantages beyond a beneficiary payout. This type of asset can be used to build a balanced and diversified investment portfolio, and some policies can protect wealth from taxes. A customized portfolio with multiple policies can create nuanced protection to suit individual needs.
Preparing for expensive long-term care after retirement will be a major consideration for many people as average lifespans continue to increase. A life insurance policy with a cash value component can offset some of the associated costs. Policies with an investment component can build equity which can be accessed in times of need, allowing savings and assets to remain intact.
Some policies offer Accelerated Death Benefits (ADB). In the event of a catastrophic illness, the insured can withdraw funds to cover medical costs before dipping into retirement savings or other assets. In this case, the death benefit will be reduced by the amount withdrawn, and any unused amount will go to the named beneficiary.
A life insurance policy can also give you a voice in what happens to your wealth after you die. By purchasing life insurance as part of your long-term financial plan, you can leave a tax-free legacy to your heirs. Talking about end-of-life matters may be uncomfortable, but you’ll need to have those conversations to protect any legacy you wish to leave behind.
Planning is important to ensure financial security in your later years. If creating flexible funds is a priority, a policy with an investment component may be particularly beneficial. For some, holding a life insurance policy can create supplemental retirement income through living benefits–money available before death. As the policy builds equity, that cash value can be used to fund loans which won’t count against the death benefit when withdrawn. A cash-value policy with living benefits can help support your financial goals over time.
If you have not factored life insurance into your financial plan, you may want to consider this asset. In most cases, life insurance policies are affordable and can be structured in a variety of ways to create a portfolio of coverage and accumulated cash value. Holding life insurance policies also can protect and enhance your wealth. Speak with your financial advisor to determine if this approach can benefit you and your loved ones.
This report is for information purposes only and is not a recommendation for any particular security. Mention of individual securities should not imply that we own the security or have owned it in the past. In addition, the information provided here should not form the basis for investment decisions. Past performance is no guarantee of future results. This information should not be used in any transaction without the advice and guidance of your Tax Professional. LifeSteps Financial has not independently verified, or attested to the accuracy or authenticity of the information, including any investment performance measurement.
