Busted! Don’t Believe This Life Insurance Myth!
Over the past fifty years that we’ve spent in the financial management field, we heard the statement - “Life insurance is a rip-off” - so many times, that we’ve lost count! For starters, this belief is entirely untrue as life insurance has countless benefits that help you and your family throughout your life, and even once you’ve passed.
Life insurance enables you to prepare for the worst and secure the future of your loved ones in the event of your death. It provides a safety net for your dependents, and it also ensures the family’s financial needs like paying off loans, paying for college, or other expenses are covered.
Unfortunately, despite the availability of knowledge on the advantages of life insurance, misguided beliefs about life insurance still exist. The presumption that life insurance is a rip-off has led to misinformation and rumors being passed on as facts. As a result, this myth has affected the perception of many people who could benefit from life insurance and left them and their loved ones high and dry in their time of need.
To help you steer clear of this misconception and understand why insurance should matter to you, PanFinancial Insurance Solutions has debunked this widely believed myth and summarized why people believe it.
Myth: Life insurance is a rip-off
Busted: Here’s why this myth is widely believed:
Ignorance: Ignorance doesn’t mean that the prospects are obtuse; they just aren’t aware of the real cost of owning an insurance product, renting the product, or the advantages of buying the product.
Limited finances: Some people (think) they don’t have enough money to purchase insurance, so they believe the myth that insurance is a rip-off.
Obstinate prospects: Some people can be stubborn about their choices and don’t feel the need for insurance, so they believe any information against life insurance without spending the time to confirm if it’s true.
Disregard for family: Believe it or not, some people don’t care about their family once they are gone, neither are they faithful to the employees that have been a part of their corporate family for decades. They are only in it for the money, and as a result, they don’t obtain insurance to secure the future of their families or employees.
Lack of knowledge: Limited awareness of the features, advantages, and benefits of owning life insurance is the number one reason to drive the “rip-off” belief. However, we know the family of the very wealthy individual that wrote a cheque for eleven million dollars and died six months later. The insurance companies paid out sixty million dollars to the family, which went to cover tax obligations. No assets had to be sold, and those assets have trebled or quadrupled over the years.
If you still aren’t sure whether life insurance is a rip-off or not, here are some points to consider:
A. Your money is invested in a “cash value insurance policy,” grows tax-free and pays out tax-free. Can this be a bad thing?
B. If you buy an amount that you expect to grow over time and die the next day, the insurance company will pay out the proceeds of the insurance tax-free.
C. As you get older and build cash reserves, the bank will accept the cash value of the policy as security in lending money to the owner of the policy at bank prime which today is about 3.95%.
D. Insurance is the only plan that will allow you to grow money tax-free, retire tax-free, and will pay out at the end of life tax-free Can this be a bad deal?
Life insurances come with guaranteed protection that secures your investment regardless of the volatile market. The more payments you make on your insurance policy, the higher its value goes. Over time, wealth creation takes place with investments flourishing along with the value of the policy.
As professionals who have been in the financial services business five decades, we have used insurance services to help a lot of our clients who have greatly benefited from it. If you’re looking to build your wealth more effectively through insurance, reach out to PanFinancial Insurance Solutions. As the best investment and wealth management firm in Toronto, Ontario, we have the essential resources and financial expertise to implement investment strategies so you can reach your financial goals. Our services include tax minimization strategies, wealth creation, and unique tax effective investments.