Alternative for your Liquid Money
Many banks may offer essentially no interest on your savings and checking accounts and CD’s. It's not always easy to find something to put your money into especially when you want your money safe and liquid and at the same time getting some kind of return.
The insurance industry has come up with a very attractive alternative for you that may be a “no-brainer”. Imagine an account with the following benefits:
- Your principal is safe and guaranteed (subject to the claims paying ability of the insurance company).
- Your account is fully liquid at all times (100% access to your account).
- You have a very reasonable expectation to earn 4% – 5% per year average return.
- No income tax on your earnings until you withdraw money (tax-deferred earnings like a retirement account).
- Tax-free transfer to your beneficiaries at death (they pay no income tax at all)
- Long-term care benefits
This alternative is known as a Single Premium Life Insurance. You make one deposit and you cannot add to the account after that.
Things you need to take into account:
1. This is a life insurance policy which means you need to be insurable. Ratings and returns are not affected by this, they simply impact how large the death benefit has to be to qualify under the life insurance tax laws.
-The interest you earn year to year is not guaranteed. You may earn 0% in one year and 13% the next. Over time, after expenses, you can reasonably expect to earn 4% – 5%.
-The cost of your insurance premiums each year, which in many cases can be pretty minor.
With today’s low interest rate, life insurance plans are becoming a popular alternative to keeping money in the bank.
If you have any further questions give our office a call at (775) 853-9033.