Let’s switch gears to another way to eliminate huge taxes: life insurance. Just so you know I say it on every program, I do not sell life insurance, I do not sell stocks, bonds, funds, annuities. I am a tax advisor and an educator. And as a tax advisor I am advising you to take advantage of the single biggest benefit in the tax code, and that is the tax exemption for life insurance.
You’ve heard me talk about the incredible leverage of the tax free benefit in life insurance, mainly for your heirs, and that payoff is big. You turn relatively small amounts of taxable money into a tax free windfall for your family. They’ll end up with millions more than you ever had. All tax free. It’s truly the best tax leverage available under the tax code. But it’s actually better than you think. Especially if you’re thinking, “what’s in it for me?” Anyone thinking that? In these volatile, uncertain times, you need to focus on investments that give you control, options, flexibility, and certainty. And you want to remove both stock market risk and tax risk, and you want a guarantee, and you want it all tax free. That’s a tall order. But you can get all of that with certain kinds of permanent life insurance.
Most people think of life insurance as something that pays off after you’re dead. That’s true! But what if I told you that you could have tax free access to your life insurance during your lifetime so you could use it for yourself? You can begin moving large amounts of money from taxable accounts into a tax free permanent life insurance policy. The money grows tax free inside the policy. It’s harder than ever today to make money on your investments, so the last thing you want to do is share any of your hard earned gains with the government. You don’t have to if those gains are earned within a life insurance policy. If your money’s going to grow it may as well grow tax free right? You need to realize that life insurance is an investment, but it’s better than your typical investment accounts because its tax free.
Oh and one more thing, life insurance comes with something else that you can never get from the stock market: a guarantee. But how much can you invest? Well that’s up to you and the tax rules. Believe it or not, this is an area where you may want to invest the maximum you can into the policy. If you’re approaching retirement or already retired and looking to shelter more of your taxable money into a tax free vehicle, this might be the place for you. But the mistake that most people make at this stage of life is trying to pay the least for the policy. So you might be thinking, “How can paying less be a mistake? Everyone wants a good deal.”