Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Why do rich people buy life insurance? Mainly they see the value the life insurance has for them. It IS the only financial tool that creates dollars for pennies, there isn't another thing that does that. They also see the safety in the cash values from market swings, lawsuits and so far, the taxman.
Rich people may buy life insurance for many reasons. Here are some:
1. Business succession. E.g. A son getting a life insurance policy on his father could enable him to buy the business when his father passes.
2. Taxes. Life insurance can be purchased to pay taxes and/or to avoid having to pay some taxes.
3. Charity. Leaving life insurance to a charity maximizes the donation and allows the donor to not have to pay it in a lump sum.
4. Tax deferred retirement income. Indexed Universal Life is a great tool for this.
5. Almost unlimited contributions. Life insurance and annuities do not have the caps that some investments have.
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1. Business succession. E.g. A son getting a life insurance policy on his father could enable him to buy the business when his father passes.
2. Taxes. Life insurance can be purchased to pay taxes and/or to avoid having to pay some taxes.
3. Charity. Leaving life insurance to a charity maximizes the donation and allows the donor to not have to pay it in a lump sum.
4. Tax deferred retirement income. Indexed Universal Life is a great tool for this.
5. Almost unlimited contributions. Life insurance and annuities do not have the caps that some investments have.