This is part 3 of a 3-part series on the safest places to put our money.
Back in the Great Depression, the American public completely lost faith in our banks and financial institutions. Panicked prevailed, virtually overnight, as mobs flocked to their local branches attempting to take out their money.
Of course, banks weren’t FDIC insured back then, and there wasn’t enough money to be doled out. Markets crashed, farms and properties foreclosed, and businesses went under. Most people lost their life savings and had to start over, if they could.
Thankfully, we’ve come a long way from those treacherous and uncertain times, and even when we hit the next Great Recession (and we will) or even Depression, there will be plenty of checks and balances to ensure our money will remain ours. Right?
Not necessarily, as we’re already seeing pensions going bankrupt and Social Security is definitely on its final throes. The sad reality is that the money and income streams you’re counting on – especially in retirement – probably won’t be there, or eroded to the point of not covering even basic living expenses.
So, safety is paramount when choosing how and where to invest. But instead of burying cash in tin cans in the back yard or hiding it in the walls (as people often did during the Depression!), we have far better options.
In fact, to ensure safety against market turbulence and even a financial collapse, we need to park our money in three places. Think of them as three separate vaults, and only you have the combination.
1. Fixed annuity
2. Fixed index annuity
3. Permanent life insurance
Today, I’ll cover #3 and the final item on our list, Permanent Life Insurance
3. Perm life insurance
With the proper permanent life insurance policy in place, we can turn on a spigot into our buckets, helping to cover our retirement shortfall.
Remember that with perm life, the income we take from it will be tax-free. As our federal, state, and municipal governments look to keep funding, they will surely try to raise revenue by increasing taxes, but a permanent life policy will allow us to bypass that increased taxation.
To set up this tax-free income spigot up, we contact your insurance company at the appropriate time and let them know that you want monthly income from your life insurance contract. At that point, they’ll let us know how much income you will have received from that policy, in the form of cash or a loan.
It’s also important to note that you won’t have to pay back these loans until the day after you pass away. At that point, paying back this loan will come out of the policy’s death benefit – not your heirs’ pockets.
Also, that permanent life insurance can guarantee retirement income whether we’re able to work or not. The reason is that we can add a rider to the policy called a “waiver of premium.”
At that point, if we’re disabled and unable to work for any reason, the insurance company will continue to fund our policy, which is the only financial vehicle that can do that!
So, we can think of our perm life insurance policy as a personal pension plan.
Of course, having that in place is incredibly important considering the coming Social Security and pension plan crises that are imminent. Instead, we’ll turn our permanent life insurance into a lifetime income annuity.
Contact me if you’d like more help keeping your money safe!