When most people think of life insurance, they typically see it as a way to be sure that their loved ones are taken care of in case of their death. This type of insurance can cover funeral expenses, help settle debt left behind, and supplement the everyday living expenses of beneficiaries, including children and spouses.
Q: How can life insurance be used to replenish savings and retirement reserves?
Marquis: The idea around life insurance is that it is only for when a person is dead. With my clients and myself, I use life insurance almost as a bond portfolio. In doing that, I am able to replenish my retirement [and other] savings.
Use life insurance to supplement retirement income and grow your retirement reserves. Deal with whole life products by mutual companies that are not beholden to their shareholders but owned by the policy holders. That way, when dividends are paid, they are paid directly to the policy holders. Not in the form of a check but in the form of reserves that go to your holdings. The value of the policy might be higher and the premiums might be higher, but there is a sense of flexibility around it. You can protect your principal. It is conservative but it is a fixed rate. You don’t see the fluctuation in a life insurance portfolio that you see in the stock market. The dividend is lower than the stock market but it is guaranteed. Plus, there is the added benefit of the actual life insurance.
Further reading: How to Calculate Your Life Insurance Needs