Why Do the Ultra-Wealthy Use Whole Life Insurance?
The Rockefeller Method is not about controlling everything from the grave. Rather, it is about giving successive generations parameters whereby they can tap into a family trust that operates as an alternative to banks.
Even better, they have access to a board that holds some of the knowledge you would have bestowed on that generation, were you still alive.
You can set up a trust that allows your heirs to invest in education and expand their ability to earn a living and create value. This can mean paying for college, an entrepreneurial program, a mastermind program, etc.
The trust is essentially a bank replacement, utilizing a Family Office concept.
However, establishing a trust is not enough. Your trust must be funded with a properly structured, optimally funded whole life insurance policy that protects and replenishes the cash in the trust. This is the heart and the financial lifeblood of the Rockefeller Method.
Why Whole Life?
Here are nine reasons why the ultra-wealthy use whole life insurance, as opposed to alternatives, to fund their Rockefeller plan:
Lifetime Coverage
Whole life insurance provides coverage for the insured's entire lifetime (as long as premiums are paid, policy is paid up, or you take a RPU (reduced-paid up). This guarantees that a death benefit will be paid out, offering peace of mind and financial security your family and legacy.
Fixed Premiums
The premiums for whole life insurance are fixed and do not increase with age.
Cash Value Accumulation
Whole life insurance policies accumulate cash value on a tax-deferred basis. A portion of each premium payment goes towards building this cash value, which grows over time at a guaranteed rate (plus dividend).
Tax Advantages
Tax-Deferred Growth: The cash value grows on a tax-deferred basis, meaning policyholders do not pay taxes on the gains as long as they remain within the policy. Tax-Free Loans and Withdrawals: Policyholders can borrow against the cash value or make withdrawals, often without incurring taxes, provided the policy is not surrendered and the loans are repaid.
Policy Loans
Policyholders can borrow against the cash value of the policy at relatively low-interest rates. These loans do not require credit checks and can be used for various financial needs, such as emergencies, education, or retirement funding.
Dividends
Properly structured, optimally funded whole life insurance policies pay dividends to policyholders. These dividends can be used to purchase additional coverage, reduce premiums, accumulate interest, or be taken as cash. As the policy matures, the rate of dividend declared becomes closer to the amount credited due to the policy's efficiency. The dividend rate is a gross declaration before expenses.
Financial Security for Beneficiaries
The death benefit provides a guaranteed sum to the beneficiaries, ensuring financial support for loved ones. This can provide income replacement and/or allow the insured to spend more by unlocking other assets knowing they can be replaced by the death benefit.
Place to Store Cash
The structure of whole life insurance can turbocharge your savings. Protecting it from liability, adding tax advantages, and allowing for access along the way.
Protection Against Market Fluctuations
The cash value in a whole life insurance policy grows at a guaranteed rate and is not subject to market volatility. This provides a stable, predictable growth of the policy's value.
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