Misconception: Tax-Free Life Insurance ONLY For the Affluent?

Now I came across a post in the NY Times which stated Life Insurance is one hell of an investment. But then hinted that it's only for the SUPER RICH!!! What.... well first I have to say, you just need the right policy and it's not hard at all. If you know the secrets. ;-)

2nd... yes I did learn about leveraging life insurance from the ultra rich, but it was easy to do and they keep it a secret so it doesn't get abused. Think about it... millions know about tax free investments. Government will soon create another method to get their tax money. It happens all the time.


Read The NY Times Post on How Affluent Use Life Insurance

IT’S viewed as an insider’s secret for the affluent: a legal way to invest in hedge funds and other potentially lucrative assets, all without paying taxes on the gains.

But private placement life insurance, as it is known, is still unfamiliar to many wealthy people — and trickier to design properly than even some savvy investors realize, tax lawyers andfinancial advisers say.

“It sounds so good — ‘I can invest tax-free and get the money’ — but it’s actually very complex,” said Jonathan Blattmachr, a retired estates and trusts partner from the Milbank Tweed law firm in New York.

Private placement life insurance is an investment wrapped inside an insurance policy.

The Internal Revenue Code treats the taxation of insurance differently from that of investments, like stocks or hedge funds, and does not levy federal income tax or the 15 percent capital gains on a life insurance policy when it pays out upon the death of the holder. So by stuffing an otherwise taxable investment inside a tax-free life insurance policy, investors can reap the compounded gains of that investment and the death benefit, all tax-free.

The insurance is a form of variable life insurance whose cash value depends upon the performance of investments held in the policy. It is particularly lucrative because hedge funds, which trade frequently, otherwise often carry the 35 percent short-term capital gains tax.

William Waxman, a principal at Waxman Cavner Lawson, an insurance broker for the wealthy and a financial adviser in Austin, Tex., said that demand for hedge funds, even in a down market, “is driving a lot of the private placement insurance market.” Still, he said, the private placement life insurance industry was relatively small; the cash value of all policies outstanding amounts to perhaps $4 billion to $5 billion. 

While brokers pitched the policies to many family offices on the East Coast, he said, West Coast offices appeared less tapped.

There are other lucrative benefits besides the absence of income taxes.
Continue Reading The Post on the NY  Times...

Action Steps

Honestly, I have had sit down chats with the "Ultra Rich" and their are life insurance policies which not only pay you monthly while alive....

But you can use these life insurances to setup you own personal banks. The "ultra rich" been using Life Insurance for years to do this. It's called the Infinite Banking secret.

==> Find out How To Set Up "Infinite Banking" Up on My Facebook Page..