A financial goal plan would most commonly consist of following goals:

      a.    Buying a New House

      b.    Buying a New Car

      c.    Investing for Child’s Education

      d.   Investing for Child’s Wedding

      e.    Investing for Retirement Corpus

The bread winner of a family plans for saving and investing as per the requirement of these goals once he/she starts earning. Among this, while purchasing a house property or a car, he/she may borrow money over & above the amount of down payment. Now, in this journey, what if there is an untimely demise of the bread winner of a family i.e. before completion of all these goals he/she is no more. There’s an emotional loss as well as financial loss to the family. That’s the reason why one needs a life insurance.

Protecting the fulfillment of required goals for our financial dependents against the untimely demise of a bread winner is the most commonly understood aspect of life insurance.

BUT… This is not it!!

There’s a broader perspective when you think of planning for a life cover. Life insurance is not just your safety net. It is a tool for your legacy. The common things for which this tool can be used for are:

     1. Asset Equalization: For example you have three kids. Two are son and one is a daughter. Sometimes daughter is not in the business but both sons are into it. But you still want to leave a large legacy for your daughter. In that case, you can put a large policy for your daughter to have it and you are able to use this tool as equalizing your asset transfer.

     2. Asset Preservation: When we say you have made so many assets but all are subject to market risks but you can actually hedge them by wrapping them with an insurance policy on place.

     3. Asset Transfer: You are transferring the asset and avoiding taxes on place as well as preventing from many other complicated compliance requirements, you can again use this liquidity and create more assets for your family.

These three things and many more things are what life insurance is used for. That’s why I call life insurance is a perfect tool to create wealth.

You, Your Business & Your Legacy

Asset equalization in business through life insurance is also helpful to mitigate Key Man Risk. As a business owner, you are building & managing an organization where you have also employed people to work for your business goals. You along with these employees are primarily dependent on the organization for primary-active source of income. Hence you are considered a Key Personnel of your business. Sometimes your absence for a day or two might have put the organizational affairs on hold. So, imagine the pain the business may go through if you are absent permanently.

The first thing your organization will need is a personnel who is your equivalent in terms of talent, responsibility & accountability for continuity of business. Remember, this does not happen free of cost. Organization will have to hire and designate a Key Personnel at your position which comes with a cost. Do you want to pay this cost out of organization’s net worth or your personal savings in your absence? Clearly No.

That’s where, Keyman Life Insurance on place becomes a tool for business continuity planning and legacy of an organization & its stakeholders. Tax benefits of related expenditure as well as the tax efficient receipts of maturity amount will be an added advantage to the organization.

A broader business Perspective

An adequate life insurance on place is also treated as a separate business vertical. Being a person who is running the business, the assets, investments, liabilities and the business itself are all exposed to market risks. Thus many large houses and families treat their life insurance protection as a separate business vertical. This means you spend a little operating cost to ensure a lumpsum benefit out of a business in case of a permanent loss of keyman. Thus this becomes a part of core wealth creation strategy for an entity. Consequently, this will add to the surplus on the balance sheet of business which eventually can be very fruitful.

The Legacy Story

We treat life insurance merely as a safety tool. However as you can clearly see, it is way beyond just a safety net. General tendency is that we underestimate the wealth creation aspect of life insurance and that’s where we miss the opportunity to capitalize on creating multi-generational wealth.

The strategy of having a whole life insurance allows you to use assets efficiently, maintain control of assets and meet desired distributions at the time of wealth transfer.

By this, you are providing financial protection, improving financial well-being, giving a potential source of funding requirements and writing a great legacy story…