Helping people reach their financial goals and designing the proper vehicles of saving, protection, and growth is a rewarding process for both client and financial professional. To properly map the financial success of a business, family, or individual, many aspects need to be carefully understood.
Working with people of varying social and financial makeups grants a certain level of clarity toward commonalities that help people like myself guide clients toward success.
The largest and hardest hurdle we often must overcome when educating any client, despite their financial status, is to teach them how to save and what proper saving is. Many people are easily subscribed to saving in traditional instruments (pension, 401k, 403b, or a bank account) we all know but fewer of us seem to have. The lack of capacity for these tools to continue to maintain our standard of living is becoming more and more noticeable. There are many reasons behind this, including the simple fact that we are living longer. The tools we have are designed by those who most likely never expected us to live as long we do today.
The sad truth that follows this fact is that many people run out of money before they run out of breath. What little people have may not be enough to maintain the standard of living in which they have become accustomed to later in life. The “golden years” have never shined so dimly for many.
The victims of this financial reality are not just grandma and grandpa. The collateral effect touches their children, and even more so, their children’s children. It appears the concept of generational wealth has begun to evaporate along with many senior’s savings that were supposed to last them for their retirement.
So, what is a financial vehicle that helps fill these gaps? One answer is a long-term protection vehicle called Whole Life Insurance. A Whole Life policy provides a way to protect your beneficiaries, save for your future, protect your liabilities, potentially return dividends1 to supplement income2, and have valuable tax benefits.3 Of the many types of vehicles we can design for our clients, Whole Life is both multipurpose and flexible. It can be more efficient when designed at a younger age to aid in saving and growth.
So, what are some of the aspects of a Whole Life policy that help avoid some of the problems we are talking about above? Whole Life policies get you to start saving with a level premium. This means, after you sit down with a financial professional, and a financial strategy is drawn out for you, you know how much you should be paying into your policy and that premium amount will not change.
Whole Life policies carry a guaranteed4 death benefit that can grow as your policy does. This means it guarantees your beneficiaries will receive an income tax free death benefit amount that may be used to replace your income or benefit in your estate.
Whole Life policies also have a growing guaranteed cash value5. This cash value is liquid and accessible for you to use whether it be for a life changing event or just for lifestyle.
Like all financial vehicles and designs, they are better for some and designed based on individual needs and goals of each client. My only regret is that I did not start saving earlier to help insure my future and the future of my family.
I am always happy to discuss and share more about any of the topics I discussed in this piece. Financial literacy is key to a confident and happy future.
1Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
2Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
3Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
4All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.
5Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Certified Financial Services LLC is not an affiliate or subsidiary of Guardian. CA Insurance License #4145213. 2022-133789 Exp. 2/24