Life Insurance : LIFE INSURANCE is a must for basic financial protection for the poor and the middle class, but it is also essential for the upper middle class and wealthy citizens. Much of the wealth of the rich is tied up in tangible assets and they own businesses that cannot be quickly converted into cash.
Life insurance products make the money available quickly in a liquid form and in the most tax-efficient manner. Life insurance allows assets to be divided sensibly between family members. The policyholder can clearly determine the ratio in which the insurance benefit is to be distributed among the heirs after their death.
Without adequate life insurance, the heirs of a wealthy man may not be able to maintain the trust of the shareholders and, as a result, the value of the estate may decline. Protracted litigation with the remaining shareholders can lead to erosion of the assets due to the high cost of litigation. It is therefore in the interests of the surviving dependents that the rich also accept an inheritance.
Cover liabilities
A wealthy industrialist can leave behind large liabilities in addition to a large fortune. In many cases, the heirs are legally obliged to settle the liabilities. Ultimately, the heirs may not remain rich after repaying the liabilities. If part of the assets are set aside in the form of life insurance policies for the benefit of the spouse and children, their standard of living will not fall significantly.
If some policies are taken out under the Married Women’s Property Act 1874, it is not possible to seize the policy money under any circumstances. So, life insurance helps a rich man to protect a good part of his wealth from the hands of creditors. In fact, asset protection is a very important part of the financial planning of any individual, rich or middle class.
Rich people often have wealth that’s been passed down through generations. Without a good plan to protect this wealth, it can disappear quickly if business conditions aren’t good.
Key Man Insurance (KMI) is like a safety net for rich businessmen. If a key partner dies, the policy pays out cash so the business can find a replacement fast. Every partnership needs KMI to stay financially strong when a key person is gone.
Life insurance products also have a perk
They’re not affected by market ups and downs, though interest rates can still matter. With guaranteed return products, you always know how much the policy is worth, no matter what.
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