Wealth Building Can Be Simple with Expert Advice and Life Insurance – Business Insider

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  • Permanent life insurance can build cash value.
  • Experts recommend investing in life insurance as an aggressive financial vehicle.
  • Work with a tax professional to minimize or avoid taxes on life insurance.

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I first dipped my toe in the proverbial life insurance waters when I was 27. My then-husband and I were newly married (without kids) and building a house. When someone offered the sage advice that we purchase a pair of term life insurance policies, ensuring peace of mind and a guaranteed death benefit should one of us die within the 30-year term of our mortgage, we dutifully obeyed. The process was easy, and our rationale was simple.

In a worst-case-scenario level catastrophe, neither of us would be on the hook for a monthly payment we could not afford alone. More importantly, our home and family would be secure. Fast forward a bunch of years (ok, two decades), and more than a few things have changed.

I’m divorced, I have two dependents, and perhaps, most importantly, I’m two decades closer to retirement. All these factors had me thinking about my big-picture financial future in a new light. Namely, should I buy life insurance? Beyond that, how do I use life insurance to build wealth? Seasoned financial planners make a few recommendations.

Anticipate Your Financial Needs

Understanding your current financial picture and envisioning a distant point down the road is integral to building a budget and planning for the future. The decision to purchase life insurance ultimately boils down to your financial goals. This is true for all, from business owners and retirees to empty nesters and singles sans kids.

Many online life insurance calculators can help you get the ball rolling. However, all calculators I’ve seen utilize a similar formula based on the following criteria: