Whether you have a professional financial advisor or prefer to manage your own finances according to your personal needs or expertise, there is an investment option out there that you might want to look into.
Though most investors focus on bonds, stocks, funds, or retirement incentives, there’s one place that people forget to look for for investment opportunities: their life insurance. There are many different types of insurance, depending on what you are looking to achieve, while also protecting your assets.
Traditionally, you might think that insurance is just a monthly payment that protects you from those dreaded “what-ifs”. Term life insurance is the closest linked to this description, though it does more than just that. There is also universal life insurance which comes with an investing component that grows as long as you continue paying into it. But you are probably still confused as to why I am referring to life insurance as an investment.
Here are just some of the reasons for which life insurance is the best kept investment secret:
It Keeps Your Hard Earned Investments in the Family
If anything was to happen to you, life insurance ensures that your family gets the investments made through your policy timeline along with their payout, tax-free. Instead of the government or other bodies benefiting from your hard work and smart savings, your beneficiaries get the full amount without deductions.
Save Money Tax-Free
A universal life insurance in Canada can protect your future income in a tax-efficient manner. If you are looking for a way to save money without being taxed and to lower your tax bracket, life insurance can be a safe place to keep your money until you need it later, while benefiting from paying less taxes now. Even if you borrow against your universal life insurance later on, it’s all tax-free!
Not every investment opportunity is flexible. Sometimes you need to lock it in for months or years before you can even attempt to reap the benefits. Insurance gives you a lot of flexibility and as much say as you want. If you want to really be hands-on and independent, you can get term life insurance and invest the rest of your savings are you want. With universal life insurance, you get an included investment portion over which you have control, however, can receive guidance with. You can borrow against your equity for life milestones like retirement, education, and more, all in a tax-free fashion, of course, meaning that it’s not as “locked in” as other investments. Don’t forget, you can also convert your term insurance into a universal insurance policy if that appeals to you down the road.
Automated Saving and Investment
Sometimes it’s hard to save and invest. It’s much easier to just spend the money we have instead of putting it away. Life insurance is something that we all see the value in and therefore are willing to pay, just like any other bill. However, how much better would it feel when you know that by paying that on a biweekly or monthly basis, you are also saving for the future, whether for retirement, medical bills, or even the welfare of your family? The ease of use and justification is really what makes life insurance the perfect vehicle for your personal investment.
Seasoned or a rookie, anyone who considers themselves an investor, even from a very personal standpoint, should seriously consider the benefits that life insurance can provide, apart from just the insurance part. Whether it’s the tax breaks, the flexibility, or the hands-off approach that appeals to you, it’s time to explore the options that life insurance can give you and your family.