There is a wealth secret that seems obvious, but most people underestimate its value and the multiple ways it can be used. It's as simple as this: Protect what you already have and shift the risk of losing it to someone else. For most people, this means buying life insurance. Most people know that life insurance pays final expenses, but it can do a whole lot more. Let's take a look at how life insurance can help you do some of the things that wealthy people do to stay on top.

Top 4 Ways to Build Wealth With Life Insurance

  1. Fund Your Retirement
    Annuities are insurance policies that accumulate until you retire then pay retirement income until you die. Tax-deferred wealth can accumulate in annuities through much larger contribution amounts than other retirement plans such as 401(k)s and IRAs. While other plans also offer the option to "annuitize" disbursements, few people use them, choosing instead to take lump sums as needed. The result is a missed opportunity to ensure lifelong retirement payments. (For more to consider when looking into this option, read Not All Retirement Accounts Should Be Tax Deferred.)

  2. Finance Your Business
    Life insurance based on the life of the business owner or other key employees not only provides protection in case the insured dies, but it is also a source of funding for the business. Permanent life insurance polices build up cash value that can be withdrawn and invested back into the business. This low-cost financing may be easier than getting a conventional loan. (For more financing tips, see 7 Unconventional Ways Businesses Can Borrow Money.)

  3. Pass on the Family Business
    For business owners with all their wealth tied up in the business, life insurance provides a way to transfer ownership of the business. Preplanned business succession provides the funding to sell the business either to another family member or someone else. The life insurance policy would be based on the life of the owner. When the owner dies, proceeds of the insurance policy pays the family in exchange for ownership of the business. This is an excellent option to provide a lump sum to the entrepreneur's spouse. (For more insight, see How To Create A Business Succession Plan.)

  4. Be a Philanthropist
    You don't have to write a big check to fund your favorite charity. Make it a beneficiary of your life insurance. Some nonprofit organizations have life insurance policies you can buy specifically to bequeath donations to them. Your church or alma mater could receive a larger donation from a life insurance policy than you may otherwise be able to afford.

The amount of life insurance purchased is based on the wealth needs of the insured. It could be a little wealth or a lot of wealth, but if you don't have any insurance, you could be ignoring a wealth secret. (Find out how to avoid insurance pitfalls in 5 Mistakes That Can Ruin Your Life (Insurance)).

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