Most of the wealthiest people in the US have earned their fortunes through hard work. Besides learning about creation of wealth, they know a few things about buying Life Insurance and turning it into a financial tool. Even though high-net-worth people do not live on a paycheck-to-paycheck basis, they still carry life insurance, although instead of buying it on mass markets, they purchase insurance from high-end companies. Here is how and why rich people buy insurance.
The first reason why rich people buy insurance is leaving the legacy to their loved ones. Wealthy people buy Life Insurance to make sure their wealth is transferred to their heirs after their passing. Income replacement is a concern across various income groups, but for rich people it just works on a different scale.
Second, rich people buy Life Insurance in order to help pay the future estate taxes. A certain amount of wealth accumulated throughout your life may be taxable, and you would not want your hires to be responsible for paying those extra taxes. Rich see Life Insurance as a tool with many benefits. If you own a business together with a partner, you can use the insurance to find a buy/sell arrangement in the event of your unexpected passing. Moreover, if your family business relies on you, you can think of a key-man policy.
Last but not least, savvy individuals recognize Life Insurance as an asset. When they are no longer in need of the policy, they can often sell it through a transaction known as life settlement. If you have Term Life or Whole Life insurance, you may be eligible for selling your policy on the open market to receive immediate cash payout.
Wealthy individuals buying insurance turn it into a valuable tool and asset. If you have questions on how you can get the most benefits from Life Insurance coverage, consult one of our licensed independent agents at Tipton Hill Insurance.