Ep. 178 - HOW LIFE INSURANCE EMPOWERS THE LIVING

In this episode, Marie-Jo Caesar explores how life insurance is more than a death benefit—it's a powerful tool for financial wellness while alive. The episode highlights life insurance's role in reducing financial anxiety, serving as a versatile financial instrument through policy loans, cash value accumulation, and tax benefits. It also emphasizes its importance in retirement planning, education funding, and charitable giving. The episode concludes by encouraging listeners to evaluate their life insurance strategies and download "The Living Benefits Checklist: 10 Ways Life Insurance Empowers You Today

🕒KEY MOMENTS IN THIS EPISODE 

00:07 Life Insurance Awareness Month

03:07 Life Insurance for Financial Confidence

10:45 Life Insurance as a Financial Instrument

14:20 Life Insurance vs. Emergency Funds

19:56 Empowering Benefits of Life Insurance

21:04 Life Insurance and Entrepreneurship

24:13 Funding Education with Life Insurance

26:57 Life Insurance for Charitable Giving

33:50 Recap of Key Points

35:17 Next Week: Beyond the Payout

📥 Special Offer: Don't forget to download your free copy of the " Living Benefits Checklist: 10 Ways Life Insurance Empowers You Today at https://mariejocaesar.com/living-benefits-checklist 

🔑 Key Topics Discussed:

·         Financial confidence through life insurance

·         Versatility of permanent policies

·         Life insurance in retirement planning

·         Enabling entrepreneurship with life insurance

·         Charitable giving using life insurance

Chapters

• 0:07 Introduction to Life Insurance
• 0:51 The Broader Benefits of Life Insurance
• 3:08 Psychological and Financial Security
• 6:34 Leveraging Life Insurance as a Financial Tool
• 15:30 Life Insurance in Retirement Planning
• 20:38 Empowering Dreams and Aspirations
• 26:57 Life Insurance in Retirement Planning
• 33:48 Conclusion and Next Steps

Transcript

Ep. 178 - LIFELINES: HOW LIFE INSURANCE EMPOWERS THE LIVING

Hello and welcome. When you hear the term life insurance, what comes to mind? Well, for many, the immediate thought is that it is simply a way to protect loved ones after you are gone. But life insurance is far more than that. It is a powerful tool that offers critical support while you are still alive, serving as a cornerstone of financial wellness, security, and peace of mind. It is not just about the future but about the present, providing a sense of security and reassurance.

September marks Life Insurance Awareness Month, and we are kicking off a four-part series dedicated to uncovering the powerful benefits of life insurance. We will be focusing not just on its role in securing a family's future but also its significance in empowering the living, giving you the confidence and control to shape your financial future.

Life insurance often gets a bad rap. Many view it as a necessary evil, a grim reminder of our mortality. But this narrow perspective misses the bigger picture. Life insurance is not about life. It's about life. It's about creating financial security, reducing anxiety, and helping you navigate financial uncertainties today while preparing for a better tomorrow. Let's shift our perspective and see life insurance for what it truly is: a tool for life, not just for death.

For those who do not know me, I am Marie-Jo Caesar, your holistic financial wellness strategist. My mission is to help you transform your relationship with money from the inside out. Today, we will challenge your preconceptions about life insurance and show you how it can be a key asset in your financial journey. Whether you are looking to protect your family's future, build wealth, or create a lasting legacy, life insurance is more than just a safety net; it is a bedrock of long-term financial confidence. 

In this first episode, we will unpack the many ways life insurance empowers you in the present, helping you live confidently and plan wisely. 

Stay with me as we embark on this journey through Life Insurance Awareness Month. Together, we will explore how life insurance can transform the way you view financial security, making it a key pillar in your financial wellness strategy today and for the years to come. 

Welcome to the Merging Life and Money Show. 

To begin, we'll examine how life insurance serves as a bedrock for financial confidence. As I mentioned a few moments ago. Many people underestimate the critical psychological benefits that come with knowing when you have a solid financial safety net in place.

A study by the American Psychological Association found that money is a top source of stress for 72 % of Americans. This financial anxiety can slip into every aspect of our lives, affecting our relationships, work performance, and overall well-being. Life insurance acts as a powerful antidote to this stress, providing a sense of security that allows us to focus on living rather than worrying. Imagine waking up every day knowing that no matter what happens, your family's financial future is secure. This piece of mind is invaluable. It allows you to focus on living your life to the fullest rather than constantly worrying about what-ifs. You can pursue your career goals, take calculated risks, and make decisions based on what's best for you and your family in the long term rather than being paralyzed by fear of financial instability.

 How exactly does life insurance reduce financial anxiety in daily life? First and foremost, it provides a solid financial safety net. Knowing that your loved ones will be taken care of financially if something happens to you eliminates a significant source of worry. This security allows you to make decisions from a place of confidence rather than fear. You can focus on building your career, pursuing education, or taking entrepreneurial risks without the constant lagging worry about what would happen to your family if you weren't there to provide for them. 

Second, life insurance can cover debts and ongoing financial obligations. If you have a mortgage, car loans, or other debts, life insurance can ensure these do not become a burden on your family. This knowledge can alleviate the stress of carrying debt and allow you to focus on other financial goals. You can invest in your home, pursue higher education, or start a business knowing that these financial commitments won't become a burden to loved ones if something unexpected happens to you. 

Third, life insurance can replace lost income. If you are the primary breadwinner in your family, life insurance can replace your income, ensuring your family's lifestyle is not drastically affected in your absence. This assurance can reduce anxiety about your family's long-term financial stability. Your spouse won't have to immediately return to work or change careers, your children can continue their education as planned, and your family can maintain their standard of living during a difficult time of loss and adjustment.

Life insurance can also serve as a cornerstone of comprehensive financial planning. It is not a standalone product but an integral part of a well-rounded financial strategy. When combined with other financial tools like savings accounts, investments, and retirement plans, life insurance creates a robust financial foundation that can help you weather various life events and economic conditions.

Consider this. A survey by Life Happens and LIMRA found that 42 % of Americans would face financial hardship within six months if a primary wage earner died.

Life insurance closes this gap, providing immediate financial relief and long-term stability. It ensures that your family has the resources to cover immediate expenses like funeral costs and ongoing bills, as well as long-term needs like mortgage payments, education expenses, and retirement savings.

Furthermore, life insurance can complement your other financial strategies in ways you might not expect. For example, it can provide liquidity to pay estate taxes, allowing your heirs to inherit your assets without having to sell them off. This can be particularly important for family businesses or real estate holdings that you want to keep in the family. Life insurance can also serve as a wealth transfer tool, helping you leave a legacy for future generations in a tax-efficient manner. 

The confidence that comes from having a comprehensive financial plan cannot be overstated. It allows you to navigate life's ups and downs with greater ease and resilience. You are better equipped to handle unexpected expenses, take calculated risks, and pursue opportunities for growth and development. This financial confidence can spill over into other areas of your life, improving your overall well-being and relationships.

Remember, financial confidence is not about having unlimited resources. It's about knowing you have a plan in place to handle life's uncertainties. Life insurance provides that assurance, allowing you to live more fully in the present while securing your future. It's a tool that empowers you to make bold moves, knowing you have a safety net in place. 

In essence, life insurance transforms your relationship with money and risks. Instead of being ruled by financial fear, you can approach life with a sense of security and optimism. This shift in mindset can be truly liberating, allowing you to focus on what really matters, living your best life, and making a positive impact on the world around you. 

If life insurance can provide such a solid foundation for financial confidence, imagine what else it could do for your financial wellness. How might it serve as a versatile tool in your financial toolkit? We will explore that next. Diving into the ways life insurance can be leveraged as a dynamic financial instrument throughout your lifetime. 

Before we get into the details of permanent insurance, cash value, and policy loans, it is important to note that these features can vary significantly between different policies and insurance providers. So, the information provided here is for general educational purposes only and should not be considered financial advice. Always consult with a licensed insurance professional or financial advisor to understand how these concepts apply to your specific situation and financial goals. 

Many people are unaware that certain types of life insurance, particularly permanent life insurance policies, offer benefits that can be accessed during your lifetime. This makes life insurance not just a protection against the worst-case scenario but a dynamic financial instrument that can enhance your financial strategies in numerous ways. 

While it is not for everyone, one of the most powerful features of Permanent Life Insurance is the ability to take out policy loans. These loans allow you to borrow against the cash value of your policy, often at favorable interest rates. Unlike a bank loan, you are essentially borrowing from yourself, and you are not obligated to pay back on a specific schedule. This flexibility can be incredibly valuable in various financial situations.

Policy loans can be used strategically in numerous ways. For instance, you could use a policy loan to cover unexpected expenses. Instead of dipping into your savings or using high-interest credit cards, you could use a policy loan to cover emergency costs. This can help you avoid depleting your emergency fund and taking on high-interest debt, preserving your overall financial health.

Another strategic use for policy loans is to invest in opportunities. You could use a loan to invest in a business venture or real estate opportunity. This can be particularly beneficial if you come across an investment opportunity that has the potential for high returns but requires quick action. The ability to access funds through a policy loan can give you the agility to seize these opportunities when they arise.

Policy loans can also be used to fund major purchases, whether it's a down payment on a house, a child's wedding, or a dream vacation; having access to the cash value of your life insurance policy can provide you with financial flexibility without disrupting your other investments or savings plans.

 In retirement, for example, policy loans can be used as a tax-efficient way to supplement your income. Because policy loans are not considered taxable income, they can be a valuable tool in managing your tax liability in retirement. This can be especially useful in years when withdrawing from other retirement accounts might push you into a higher tax bracket. 

It is important to know that policy loans do come with risks. If not managed properly, they can reduce the death benefit and potentially cause the policy to lapse. Always consult with a financial professional before taking out a policy loan to ensure it aligns with your overall financial strategy and does not jeopardize the primary purpose of your life insurance policy.

Another versatile aspect of permanent life insurance is its cash value component. As you pay premiums, a portion goes into a cash value account that grows tax-deferred over time. This cash value can serve as an alternative to a traditional emergency fund, providing you with a financial cushion for unexpected costs.

According to a 2022 bank rate survey, only 44 % of Americans could cover $1,000 emergency expenses from savings. The cash value in a life insurance policy can provide a financial cushion for unexpected costs, as I mentioned before, giving you added peace of mind. Knowing you have this resource available can reduce financial stress and give you more confidence in your ability to handle unexpected expenses. 

Unlike traditional savings accounts, the cash value in a life insurance policy grows tax deferred. This means you don't pay taxes on the growth as well as the money remains in the policy. Over time, this tax-advantaged growth can result in a significant accumulation of wealth. This can be particularly beneficial if you are in a high tax bracket or if you have maxed out other tax-advantageous savings vehicles like 401ks and IRAs.

Life insurance can also play an important role in retirement planning. As you approach retirement, you might find that your need for life insurance decreases, but the cash value you've accumulated can become a valuable asset in your retirement strategy. There are several ways you can use life insurance in your retirement planning.

First, You can use the cash value of your policy as a source of supplemental income in retirement. You can withdraw from or borrow against the cash value of your policy to supplement your other sources of retirement income. This can be particularly useful in years when your other investments might be underperforming, allowing you to avoid selling assets at a loss.

Another advantage of using life insurance in retirement planning is the potential for tax-efficient withdrawals. When structured correctly, withdrawal from a life insurance policy can be tax-free, unlike withdrawal from traditional retirement accounts like (401)K Plans and traditional IRAs. This can help you manage your tax liability in retirement, potentially keeping you in a lower tax bracket.

Life insurance can also be a powerful tool for legacy planning. Make sure to listen to my last episode I talked about it then. Even if you use up other assets in retirement, the best benefit from your life insurance policy can ensure that you are still able to leave a financial legacy for your heirs. This can be particularly important if you want to provide for family members with special needs or leave money for a favorite charity. 

Some life insurance policies offer riders that allow you to access the death benefit early. If you need long-term care, this can provide valuable protection against potentially catastrophic costs of long-term care, which are not covered by traditional health insurance or Medicare. Having this option can give you peace of mind, knowing that you won't burden your family with care costs if you need extended care in your later years.

A study by the Insured Retirement Institute found that only 54 % of baby boomers have retirement savings. For those who started saving late or haven't saved enough, life insurance can provide a valuable safety net and an additional source of retirement funds. The cash value component of a permanent life insurance policy can serve as a supplemental retirement account, offering tax advantages and flexibility that other retirement savings vehicles might not provide. Only if the policy was purchased when you were younger, 

It is worth noting that using life insurance as a financial tool requires careful planning and consideration, as well as the type of policy, the amount of coverage, and how you use a policy's features, which can significantly impact its effectiveness as a financial tool. Always work with a qualified financial professional to ensure your life insurance strategy aligns with your overall financial goals. Do not be shy to ask questions about those life insurance policies. 

The professional can help you determine the right balance between protection and cash value accumulation, ensure your policy is structured to maximize tax advantages and help you integrate your life insurance strategy with your other financial plans. They can also help you understand the potential risks and downsides of different strategies, ensuring you make informed decisions that support your long-term financial wellness. 

As we've seen, life insurance is far more than just a death benefit. It's a dynamic financial tool that can provide liquidity, tax advantages, and financial flexibility Throughout your life. From providing a source of emergency funds to supplementing your retirement income, Life insurance can play a variety of roles in your financial strategy. 

But the benefits of life insurance extend even further. How can it empower you to pursue your dreams and make a lasting impact? We'll explore that in our final point, looking at how life insurance can serve as a catalyst in achieving your most ambitious goals and leaving a meaningful legacy. 

Life insurance is not just about protection; it is about empowerment. It provides a safety net that allows you to take calculated risks and pursue your dreams with confidence. 

Let's explore how life insurance can enable you to achieve your aspirations and make a lasting impact, focusing on three key areas: entrepreneurship, education, funding, and charitable giving. 

First, let's consider the dream of starting your own business. Entrepreneurship is a path filled with risks and uncertainties. According to the U. S. Bureau of Labor Statistics, about 20 % of small businesses fail within the first year. This statistic might differ from many people pursuing their entrepreneurial dreams. However, with life insurance, you have a financial safety net that can give you the courage to take that leap.

Life insurance can support your entrepreneurial journey in several ways. First and foremost, it provides financial security for your family while you focus on growing your business. This peace of mind is invaluable when you are pouring your time, energy, and resources into a new venture. You can pursue your business goals knowing that your family's financial future is protected regardless of the outcome of your entrepreneurial effort.

Furthermore, you can use the cash value of a permanent life insurance policy as collateral for a business loan. This can be a game changer when you are starting out, and traditional lenders might be hesitant to extend credit to a new business. By using your life insurance policy as collateral, you are demonstrating your commitment to the business and potentially securing more favorable loan terms.

If your business encounters struggles along the way, you can borrow against your policy to inject cash into your company. This flexibility can be very important during the early years of the business, when cash flow can be unpredictable. Instead of taking on high-interest debt or giving up equity in your company, you can use your life insurance policy as a source of funds to weather temporary financial storms.

In a worst-case scenario, the debt benefit ensures your family is not burdened with business debt. This is particularly important for sole proprietors or small business owners who might have personally guaranteed business loans. Your life insurance can provide the funds to pay off these debts, protecting your family's assets and preserving your business legacy.

Consider the inspiring story of Walt Disney. When banks refused to lend him money to finance the creation of Disneyland, Disney took out a loan against his life insurance policy. This bold move, enabled by his life insurance, allowed him to bring his vision to life. Today, Disneyland is a global icon, all because life insurance gave Disney the means to pursue his dream when traditional funding sources fell through.

Next, let's address how life insurance can secure your children's educational future. The cost of higher education continues to rise at an alarming rate. According to the College Board, the average annual cost of tuition and fees at a private four-year college reached $38,070 for the 2021-2022 academic year. This staggering figure does not even include room and board books and other living expenses. In this context, life insurance can play a significant role in ensuring your children's education is funded, regardless of what happens to you.

Life insurance can help fund education in several ways. Most obviously, the death benefit can cover education costs if something happens to you. This ensures that your children's educational opportunities are not compromised by the loss of your income. They can pursue their academic goals without the added stress of financial constraints during an already difficult time. 

However, the benefits of life insurance for education funding extend beyond death benefits. You can use the cash value of a permanent policy to pay for tuition and other expenses. This can be particularly useful if you find yourself needing additional funds to cover education costs. Unlike student loans, which can saddle your children with debt for years after graduation, using the cash value of your life insurance policy allows you to fund their education without incurring additional debt.

Some policies offer accelerated benefit riders that allow you to access a portion of the death benefit for educational expenses. This feature can provide additional flexibility in your education funding strategy, allowing you to tap into the policy's benefits while you are still alive to help your children achieve their educational goals. 

By using life insurance as part of your education funding strategy you are not only protecting your children's future but also freeing up other assets for different financial goals. This holistic approach to financial planning can help you balance competitive priorities and ensure you are prepared for various life scenarios. 

Lastly, let's explore how life insurance can enable charity giving and help you make a lasting impact during your lifetime. Many people dream of living a legacy and making the world a better place. Life insurance provides unique opportunities to amplify your charitable impact, allowing you to make larger gifts than you might otherwise be able to afford. 

There are several ways you can use life insurance for charitable giving. One straightforward approach is to name a charity as a beneficiary of your policy. This allows you to make a significant gift to a cause you care about without depleting the assets you will leave to your heirs. It is a way to balance your desire to support charitable causes with your goals of providing for your family. 

Another option is to donate a policy you no longer need to a charitable organization. As your financial situation changes over time, you might find that you have life insurance coverage beyond what your family requires. So, instead of letting the policy lapse or surrendering it for its cash value, you can donate it to a charity. This allows you to make a significant gift while potentially receiving tax benefits. 

You can also use the cash value of a policy to make regular donations during your lifetime. This approach allows you to support causes you care about on an ongoing basis, potentially seeing the impact of your giving firsthand. It's a way to start building your charitable legacy now rather than waiting until after you are gone. 

For those with significant estates, setting up a charitable remainder trust with life insurance can be an effective strategy. This arrangement provides income to you during your lifetime and a donation to charity upon your death. It is a sophisticated approach that can offer tax benefits while allowing you to support causes that are important to you. 

The growing interest in using life insurance for charitable giving is evident. In recent trends, a study by the National Association of Insurance Commissioners found that 44 % of millennials are more likely to purchase life insurance if they can use it for charitable giving. This showcases the desire among younger generations to align their financial strategies with their values and make a positive impact on the world.. 

Consider the inspiring story of Paul Morrow, a successful businessman who used his life insurance policy to establish a scholarship for his alma mater. By naming the university as a beneficiary of his policy, he created a legacy that will support students for generations to come, all while still enjoying the living benefits of his policy during his lifetime.

Morrow's story illustrates how life insurance can be a powerful tool for creating a lasting positive impact that extends far beyond your immediate family. 

These examples illustrate how life insurance can be a powerful tool for achieving your dreams and making a positive impact. It provides the financial security and flexibility to take risks, invest in the future, and leave a lasting legacy.

Whether you're aspiring to start a business, ensure your children's education, or make a significant charitable contribution, life insurance can play an essential role in turning this aspiration into reality.

Life insurance empowers you to dream big and pursue those dreams with confidence. It provides a safety net that allows you to pursue opportunities you might otherwise consider too risky. With the right life insurance strategy, you can balance the need for financial security with a desire to make bold moves and create meaningful change in your life and the lives of others.

As author and motivational speaker Zig Ziglar once said, you were born to win, but to be a winner, you must plan to win. Prepare to win and expect to win. Life insurance is a critical part of that winning plan. It empowers you to dream big, take action, and create the life you envision, not just for your loved ones after you are gone, but for yourself right here and now.

I will also add that in his book, The Power of Purpose, author Richard J. Leider writes the purpose of life is to live a life of purpose. Life insurance can be a powerful tool in helping you fulfill that purpose. It provides the financial foundation and flexibility to pursue your passions, support your loved ones, and make a lasting impact on the world around you. 

By viewing life insurance not just as a financial product but as a means to empower your dreams and aspirations, you open up a world of possibilities. It becomes a tool for living, not just for dying. It allows you to take calculated risks, knowing that you have a safety net in place. It gives you the freedom to pursue your passions, knowing that your family's future is secure, and it enables you to leave a legacy that extends far beyond your lifetime.

Whether it's starting a business, funding education, or living a charitable legacy, life insurance can be the key that unlocks your potential and allows you to live a life of purpose and impact. It is not just about financial security. It's about creating the freedom and flexibility to live a life on your own terms, pursue your dreams, and make a difference in the world.

As we conclude this exploration of life insurance as an enabler of dreams and aspirations, I encourage you to think about your own goals and aspirations. How might life insurance fit into your plan? How could it provide the security and flexibility you need to pursue your dreams? These are important questions to consider as you develop your financial strategy and plan for the future. 

As we wrap up this enlightening journey into the world of life insurance, let's recap the key points we've explored today.

We've seen how life insurance serves as a pillar of financial wellness for the living, not just the benefit for those left behind. 

We discovered that life insurance provides a foundation for financial confidence, reducing anxiety, and allowing you to live more fully in the present. 

We explored its versatility as a financial tool offering benefits like policy loans and tax-advantaged cash value accumulation.

And finally, we saw how life insurance can empower you to pursue your dreams, whether that's starting a business, funding education, or making a charitable impact. 

Remember, life insurance is not about death. It's about life. It's about creating security, pursuing growth, and enabling dreams. 

As my friend, the renowned personal finance expert Suze Orman, once said, A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.

This episode is just the beginning of our exploration into the power of life insurance. In our next episode, beyond the payout, we will address the various types of life insurance policies and how to choose the right one for your unique situation.

Life Insurance Awareness Month reminds us of the importance of these often-overlooked financial tools. I encourage you to take this opportunity to re-evaluate your financial strategy and consider how life insurance might enhance your financial wellness. 

Are you fully leveraging the power of life insurance? Are there areas where life insurance could provide additional security or opportunities? 

If you are unsure, I strongly recommend scheduling a consultation with a licensed insurance professional. They can provide personalized advice based on your unique financial situation and goals. 

To help you get started, I actually created a free resource, 'The Living Benefits Checklist, 10 Ways Life Insurance Empowers You Today'. This comprehensive guide will help you understand and evaluate the various ways life insurance can benefit you during your lifetime. You can download it from the link in the show notes. 

Remember, knowledge is power and understanding your financial options is the first step in achieving true financial wellness.

Thank you for tuning in to this episode of the Merging Life and Money show. I hope you've gained valuable insight into the power of life insurance as a tool for living.

Next week, we will continue our Life Insurance Awareness Month series with, as I mentioned a few moments ago, 'Beyond the payout, choosing the right life insurance policy.' Don't miss it. 

I'd like to express my gratitude to Life Happens, the non-profit organization behind Life Insurance Awareness Month, for their tireless efforts in educating the public about the importance of life insurance.

I am your host, Marie-Jo Caesar. I will be back again next week. Until then, continue merging life and money. Bye for now.