But most people do not understand it.
i am not talking about critical illness, health insurance, or even personal accident. i want to emphasise why life insurance. and why now.
most people buy life insurance because they care deeply about someone or something. Its either because they want to or because the owe someone (loans…)
THE PURPOSE OF LIFE INSURANCE
the purpose of life insurance is to provide cash for your family, you business or yourself. It help you to create wealth when you don’t have time to do so. It also help you to protect your estate from the legal fee during the distribution process to your beneficiaries.
WHO NEED LIFE INSURANCE?
when you die, two things will happen,
i) there will be emotional loss felt by those you leave behind.
ii) economy loss.
if your death will create economy loss for your family, your estate, your business, your community, your church or temple or mosque, your college, your school or your favorite charity, you probably need some more life insurance
LIFE INSURANCE IS CASH
life insurance is money. it is cash. it is a way to create wealth for your family, or your business. it is also a way to accumulate cash for your own future. (retirement fund).
LIFE INSURANCE IS YOUR CASH CUSHION
During your lifetime, there will probably be times when you need cash cushion be if for emergency purposes, or during time when business opportunity came, and you can’t get a loan form a bank, your can trust your “Private banking” which is the life insurance.
HOW LIFE INSURANCE WORKS?
if you are age 30, you can purchase RM1,000,000 of life insurance for RM21,360 / year. In 30 years, at the age of 60, you would have paid RM640,800.
Base on current assumptions, the cash value would be about RM1,319,666. and the death benefit would have grown from RM1,000,000 to RM1,500,000.
if you would have put the RM21,360 per year for 30 years into a 4% interest vehicle, you would have RM1,197,974 and have no life insurance.
once people start to understand the numbers, life insurance start to make a lot more sense.
WHY DON’T BUY TERM INSURANCE INSTEAD?
Term insurance costs a lot less, but you have to die to win. Base on statistic, out of 100 policy, only less then 1% of the people claim from term insurance. Do you want to gamble with you life?. Cash value puts the life into life insurance.
I HAVE MANY OTHER ASSETS, WHY SHOUD I NEED LIFE INSURANCE?
Assets allocation and diversification. Most people agree that it makes sense to diversify. Do not put all your eggs in one baskets.
life insurance should be part of the defensive portion of a diversify portfolio. if you portfolio consist of real estate, stock, bonds, and cash, why not put 1% or 2% of your total portfolio into life insurance each year?
HOW TO USE 1% OF YOUR WEALTH TO PROTECT 99% OF YOUR WEALTH?
let say you are worth RM10,000,000. Moving 1% per year, RM100,000 would enable you to create another RM5,000,000 to RM10,000,000 of additional wealth.
WHAT IF SOMEONE SUGGEST TO YOU NOT TO BUY LIFE INSURANCE?
ask them if they are going to provide additional money for your spouse, children, or grandchildren.
LIFE INSURANCE AS YOUR LINE OF CREDIT FOR YOUR BUSINESS
when you die, your family and your business will probably need some money. Why not create a standby line of credit whereby they will receive RM1 million when you die? all you have to pay is 2% interest (RM21,000) in advance each year. Bear in mind, this is an interest only loan where the principal never has to be repaid. if someday in the future you decided you do not need the money when you die, you will get your money back, plus interest.
HOW MUCH MONEY DO YOU WANT FOR RETIREMENT?
cash value life insurance can provide money for your family when you die or it can be use to supplement your income when you retire. RM1 million can generate about RM50,000 annually. The question is, how much money do you and your wife need during your retirement?
HOW LONG DO YOU NEED TO SAVE TO HAVE RM1 MILLION?
investing RM21K per year at the rate of 7% (if you get lucky in the stock market), it will take 22 years.
at the rate of 4% it will take 27 years.
at the rate of 1% it will takes 39 years.
at 0% rate it will takes 48 years.
with life insurance, yo can have RM1 million of potential protection from day one and accumulate the RM1 million during your life time too.
No body can be expert in everything. successful people do not have time to become experts in life insurance. They are too busy staying on top in their expertise. That is why is essential to select an advisor who have the knowledge, wisdom and vision to help with life insurance planning.
if people understood life insurance, they would be lining up to buy it. But most people do not understand it.
Most people think the premium is an expenses. If you understand it, purchasing a cash value life insurance is like purchasing an asset.
if you need my help in setting up an insurance planning. feel free to contact me.