The idea of generational wealth – which is simply passing down assets from one generation to the next – can be seen as a lofty goal for many families. But it’s not about who gets grandpa’s mansion and stocks, rather it’s about breaking free from the cycle of generational debt and giving your kids and grandkids an advantage in life. This means passing down a nest egg to help alleviate their college debt or even a lump sum of money to serve as down payment on a home.
One way to make this happen is through life insurance. Life insurance policies can help you plan for a better future without having to be super rich. It’s a way to build a foundation to help ensure that our love ones will have an even playing field to offset the rising costs of, well, pretty much everything in today’s society.
A financial planner and life insurance agent can help you review what options will work for you, however here a few examples of how some use life insurance to create wealth:
1) People purchase life insurance so that when they die their family or beneficiary will receive the death benefit
2) People can take out a life insurance policy on someone else, like their parents, and make themselvesthe beneficiary so that when the insured person dies they receive the death benefit. However, in order to do so, the beneficiary is generally required to (1) obtain permission from the insured person and (2) demonstrate an insurable interest (proof of exposure to financial loss as a result of the insured’s death).