Be Your Own Bank with Life Insurance

Be Your Own Bank with Life Insurance – Is this legit?

On this episode of A Wiser Retirement® Podcast, we talk about using life insurance to be your own bank with Casey Smith and Shawna Theriault, CFP®, CPA, CDFA®. We discuss what happens if you rely solely on life insurance for wealth-building and stress the importance of having a diversified financial plan.

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Summary

Understanding Life Insurance as a Personal Banking Strategy

Life insurance is often marketed as a tool for wealth building and acting as a personal banking system. However, it’s important to be aware of the complexities and potential pitfalls.

Questionable Advice from Financial Professionals

Advisors sometimes prioritize sales over clients’ best interests, earning substantial commissions on products that may not be most beneficial. For instance, an advisor recommended an annuity to a charity, resulting in high commissions but questionable tax benefits. Working with Fiduciary, unbiased advisors who prioritize client needs is crucial.

Avoid High Fees and Limited Returns

Annuities and indexed annuities often come with high fees that can reduce potential returns. Understanding all associated costs and comparing them with other investment options is vital to make informed financial decisions.

Diversify Your Investments

While life insurance can be part of a comprehensive financial plan, relying solely on it for wealth-building or retirement savings is usually not advisable. Be cautious of extreme examples and persuasive sales tactics used to market life insurance products. Focus on building a diversified financial plan aligned with your overall goals.

Be Your Own Bank

Using life insurance to “be your own bank” or as a wealth-building strategy requires careful consideration and a deep understanding of the associated costs and benefits. It’s essential to approach these decisions with caution and to seek unbiased advice to make sound financial choices that align with your long-term goals.

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