In the last post I spent
some time describing the benefits of supplementing your retirement income with cash value life insurance. My favorite is Equity Indexed Universal Life. I believe that, for a young person, these products deliver the most growth over time with the least risk. But there's another aspect of these solutions that I'd like to talk about- the tax benefits.
I heard a story about an insurance agent who was up against a stockbroker in trying to win the business of a client. This person had a certain amount of money to invest, and he had approached both of these fellows to prepare illustrations of future results. Of course, the stockbroker used an average rate of return north of 9% to calculate his, while the insurance agent was more conservative, using a 6% rate. As the two fellows presented their results to the client, the stockbroker was beaming. His future values were nearly 20% more over the time period. It was clearly, to the broker, no contest. Until the insurance agent interjected to the client, "Oh, I'm sorry. I didn't know that we were supposed to have to pay taxes on this money."
The agent got the account.