Financial Foundation

Financial Foundation

The foundation to a proper financial plan during one’s accumulation phase in life is a solid base of emergency savings, income protection and life insurance. Many clients tend to enjoy and focus on the next hot stock, but if you fail to have this “foundation” conversation with your clients you’re doing a huge disservice.

The most basic financial goal is to be in a better financial position than you were the previous year, to continue to grow your assets, and eventually one day reach “financial independence.”

This is when you do not have to rely on a job for income, rather, if you wish, you can rely on your assets to generate an income that will last a lifetime.

There are three life events that can significantly derail your plan: 

  1. Lose your job – Whether on your own terms or you’re forced out, your six months +/- emergency reserves held in a safe and liquid account will be there to hold you over.
  2. Become too sick or hurt to perform your occupation – Your income protection plan will kick in to ensure you and your family maintain the lifestyle you have worked so hard to create.
  3. You or your significant other passes away – Your life insurance protection is there to create an income replacement.

Proper financial planning isn’t sexy, but without the foundation in place one’s family could move many years down the economic pyramid – it could greatly extend the time until one ultimately reaches “financial independence.” It’s imperative to focus on a financial plan that guarantees your clients never move backwards! 

Let’s explore an idea from the financial foundation – Life Insurance. Illustrated below is an indexed universal life policy that is used as a tax favorable asset accumulation strategy – a healthy 35-year-old female who contributes $500 a month over a twenty-year period, a total of $120,000 contributed. The tax-deferred growth can provide a stable source of supplemental retirement income through tax-free loans and partial surrenders. In addition, the tax-free death benefit will assure the legacy to her family.

  • Age 70:    Cash Value $506,649 | Death Benefit $756,649
  • Age 80:    Cash Value $938,583 | Death Benefit $1,188,583
  • Age 90:    Cash Value $1,651,809 | Death Benefit $1,901,809

To learn more, contact an insurance expert today!