Depending upon where you are at in your financial journey, you might be looking at your money in different ways. If you are younger, you may be looking at aggressive growth, radical cash flow or returns; your strategy is probably a little more risky. If you are nearing retirement, you are probably looking for the greatest long-term returns, steady cash flow for the years you will not be working, and financial security for all the money you worked so hard to gain. No matter what your strategy is, you are probably banking on dividends to continue putting to use and to grow your wealth.

So you have a few options: do you invest in the risky stock market and let Wall Street control your money, hoping for the highest dividend yield they can provide? Or do you take that money and put it into a mutually owned whole life insurance policy that pays you a secure dividend and grows its usable cash value exponentially? If your goal is asset protection and growth, the second strategy is going to be your best option, no matter where you are at in your career. Here are some things that Factum Financial hopes you’ll think about.

Why You Shouldn’t Do What Everyone Else Does

The stock market is a tempting mistress and a constant fixture in American society. People have seen massive returns and made fortunes off of relatively small investments. Even if you aren’t trying to invest a lot of money with the sharks on Wall Street, most people save for retirement with a 401k or an IRA–products that use the market as a tool for investment growth–so they can potentially retire well off a fraction investment of their yearly salary. If you were cognizant in the great recession of 2008-2009, you should see a problem with this strategy. Maybe you can remember your feeling of horror at the losses to your retirement fund due to that market fall. Millennials might have to just imagine the horror of that feeling, as many were too young to have investment portfolios yet, but millenials make up a large portion of the job market now and many are looking for ways to save for the future outside of the market. For the most part, we all remember how terrible the economy was and how much people lost who had faithfully contributed to their 401k for 10-30 years. So why do people keep investing their hard earned money and risking their retirement on the market?

For a great illustration of the risks posed to your investment contributions by the traditional investment strategy, check out this fish tale from Pamela Yellen and Dean Rotbart. The question is do you have the time to rebuild your retirement if the market dips again, given the tremendous percentage you stand to lose over time even if the market “performs” well for a few years? On average, the time between recession periods in the U.S. is just over 4 years! With the chance for a major market drop imminent, you have to ask yourself: Why would I save like everyone else and keep coming back to the stock market if I never see the results I hope for? Perhaps it’s time to look for a safe solution. Maybe it’s time to consider how you can grow and protect your wealth with whole life insurance.




Whole Life Made Simple

Most people understand how life insurance works. Life insurance protects your family, loved ones, and business partners from financial loss in the event of your passing. You can purchase many different types of life insurance and financial gurus all have a “song to sing” about which form of life insurance policy you should buy. Many suggest you purchase term life insurance, a policy that you pay premiums for on a term basis to reduce costs, and then invest the difference you save by not buying whole life insurance. The problem with that strategy is that most people outlive the term of their life insurance policy, so they invest money into something that doesn’t give them any additional benefits and likely won’t even pay their family a death benefit. Whole life insurance policies come with additional benefits and may be a better use of your hard earned money, especially when it comes to retirement.

Whole life insurance policies are permanent life insurance policies, meaning that they do not expire at any age and will pay a death benefit to your beneficiaries. That’s only part of what makes them a good choice for you if you’re trying to grow your assets and save for retirement. Dividend paying whole life insurance policies pay participaters a dividend annually, similar to what you might receive on the stock market. Many policies also have a cash value feature with funds that you can access and use how and when you want. That’s why, with a whole life insurance policy, you can act as your own banker and cut the wolves of Wall Street out of your savings strategy all together.

Everyone Likes Safe Dividend Returns

In the life insurance industry, there are two types of companies: stock companies and mutual companies. Stock companies function similar to any other company that sells on the stock market, complete with the crests and crashes associated with that volatility. Mutual companies are mutually owned by their policyholders and many mutually owned companies that provide whole life insurance policies give the holders a yearly dividend. When the money you put into the company is used to manage company operations and growth, those companies give you a dividend. These dividends are paid out once a year, once the company has run a “worst case” financial scenario report, with a growth increase every time they are paid. A lot of people get scared away because they hear from wealth advisors that these dividends are not guaranteed, which is true. However, many life insurance companies have paid a dividend for 160 years straight, even through the great depression. You can’t count on that security on the stock market. Plus you can use the dividends how you want–take them in cash, leave them to gain interest, or use dividends to pay for “paid-up additional insurance” to increase the death benefit amount. It’s your money and you get to make it work for you.




Don’t You Want Constant Growth?

Whole life insurance comes with a cash value. What does that mean to you? It means you have a savings strategy that protects your money from the stock market crashes that affect your peers. Your premium payments build cash value that you can borrow against when it makes sense. And borrowing against your cash value doesn’t have any tax ramifications like a 401k, meaning that it can be accessed without losing a huge portion upfront. A loan against your cash value on your policy doesn’t interrupt the compounding effect, so you see true growth on your policy and you can use your cash value to manage your financial needs. If the scenario arose where you did not pay back the loan before you pass, the difference is just subtracted from your death benefit. Properly structured whole life insurance policies will see exponential expansion in their cash value and death benefit over time. No more watching your 401k rise and fall with the market. Get in touch with that feeling that comes with protected, constant growth.

The Future Comes Fast

With whole life, you have a life insurance product that acts as a savings vehicle, with a built in cash value that you can borrow from to make major purchases. You also don’t have to risk your retirement funds on the volatile stock market anymore, so you’re set for the time when you are no longer working and you can make plans to enjoy that retirement instead of stress over your next meal as a senior. Factum sees these benefits as added perks to the purchase of whole life insurance. As with any life insurance product, the death benefit paid out after you have graduated from this life is the primary reason most people buy. Life can be sudden and any given day could be the day something happens that you didn’t expect. The security of a whole life policy is worth the cost alone, knowing your family, loved ones, or business partners are protected.

So, if there is a safe vehicle for retirement savings, cash-flow growth, and legacy protection, why do people keep using a risky financial plan to grow and protect their wealth? Would it surprise you to learn that many of the wealthiest people and the biggest banks use this strategy to protect their assets? If you could protect your wealth and your family in a radical but time tested way, what’s holding you back?

At Factum Financial, our team of wealth strategists believe in this process for protecting your legacy and growing your wealth. We focus on educating people to taking control of their banking function and safeguard their future. If you are tired of playing risky games with your money and want to protect your legacy, contact us today for a free wealth strategy session.

For more financial knowledge, follow this link to read the previous blog.