How SDLI Can Provide Flexibility - Replay

My name is Brian Scribonia and on this episode of the Common Sense Financial Podcast, While there is an undeniable cost associated with a special desired life insurance policy, it's crucial to consider this expense in contrast to the potential tax liabilities. Without proper planning, taxes could take a significant bite out of your investment growth. Consider that retirement account distributions are generally taxed as ordinary income. For a high income individual, this can mean losing a substantial chunk of your retirement savings to taxes. Conversely, the cash value growth within a life insurance policy is tax deferred and policy loans taken out are typically tax free.

Well, hey everybody and thank you for listening and joining us today. We hope that this podcast can provide you with some insights to help you grow and get closer to your goals this year. But before we get started, be sure to subscribe to this podcast. That way you'll be notified about new content and you'll be able to listen to Brian tackle a variety of different topics so you can subscribe on Apple Podcast Podcast, Spotify, Stitcher, Soundcloud, pretty much anywhere that podcast can be found. And all the links to subscribe as well as past episodes are available on the website@Brian Scribonia.com so thanks again for tuning in and let's get started.

Opportunities are still there. The attempt at passing down wealth from generation to generation. Consider the outcome, not just popular opinion and the whole teaching there is about.

Preparedness and being ready.

There's a difference between what's real and what's true. You're listening to the Common Sense Financial Podcast. I'm your host Brian Scribonia. Thanks for tuning in and let's get into today's topic. A high cash value life insurance policy can help facilitate tax advantage growth that standard retirement accounts may not be able to match. Here's how it works. A common scenario for successful high earning professionals is having decades of disciplined saving and investing that leads to substantial nest eggs and retirement plans. But now you find yourself in a financial bind. Despite your wealth, your money is largely inaccessible, tied up in retirement funds until a specified age. And then on top of that, the looming specter of significant tax burdens both now and in the future adds another layer of concern. Fortunately, there is a viable solution that enables you to access your cash while maintaining the benefits of tax free growth. And that is a specially designed life insurance policy. High income professionals often face a dual tax burden. Your current high income places you in a high tax bracket, reducing the net income you have available for investment. Meanwhile, the money you've diligently saved in your retirement plan will be subjected to potentially hefty taxes upon a withdrawal sometime later in life. Additionally, while retirement accounts are great vehicles for long term savings, they lack flexibility. You're penalized for early withdrawals, leaving you without a a readily available source of funds for unexpected opportunities or emergencies. This lack of liquidity can be problematic if you're looking to invest in new business ventures, diversify your portfolio or manage unexpected expenses. For high income individuals grappling with these issues, a specially designed life insurance policy may be the answer. This financial strategy utilizes a high cash value life insurance policy to facilitate tax advantaged growth and offer flexibility that standard retirement accounts simply can't match. And here's how it works. First, the premiums you pay into your life insurance policy are used to help capitalize the policy and build cash value over a set period of time. This growth occurs on a tax deferred basis, mirroring the benefits of your retirement accounts. Yet the compounding effect can be uninterrupted when using a non recognition policy loan. Unlike retirement funds, however, the cash value in your policy can be accessed at any time for any reason without a penalty. These withdrawals are generally tax free as they are considered loans against the policy's death benefit and cash surrender value. If properly managed, these policy loans have flexibility and are not required to be repaid during your lifetime and can be simply deducted from the death benefit or cash surrender value when the policy pays out. This strategy enables you to tap into your wealth when needed, providing the liquidity to seize investment opportunities or meet unexpected expenses. At the same time, your cash continues to grow tax free within the policy, aided in building tax free and tax favored wealth. It's essential to note that when accessing the cash value of your life insurance policy through policy loans, interest is generally applied to the borrowed amount. This interest charge is an aspect that policy owners must strategically manage to maximize their policy's effectiveness. However, a well designed life insurance policy provides an opportunity to offset these interest charges. The growth of the cash value within the policy, when effectively managed, can potentially offset the interest applied to the policy loan, thereby recapturing the cost. This balance is not a given. Not all life insurance policies offer the features necessary to execute this strategy effectively. It's a delicate balance that must be carefully managed and because of these complexities, it's crucial that to discuss this strategy with a professional well versed in specially designed life insurance policies. Their experience and understanding of these designs can help you leverage the full benefit of the policy, effectively manage potential cost and navigate the nuances of policy Loans the benefit of a specially designed life insurance policy extends beyond liquidity and tax advantages. This strategic tool offers several other key advantages for wealth management, asset protection and estate planning such as asset protection. In many jurisdictions, life insurance policies are protected from creditors, providing a shield for your assets. Then you have Estate balancing. Life insurance can play a crucial role in balancing out an estate among surviving family members. If certain assets are designated to specific individuals or charities, the death benefit from a life insurance policy can be used to equalize the inheritance among the other heirs. This strategy helps to maintain family harmony by preventing potential disputes over perceived imbalances in inheritance distribution. Then you have estate liquidity. Often significant portions of an estate such as a family business or a farm. They can be illiquid, making it difficult for heirs to handle estate tax liabilities or operational expenses. A life insurance policy can provide immediate liquidity to family members or business partners upon a death, ensuring the continuity of the business or farm without the need to sell off assets. Then you have estate planning. So life insurance proceeds can provide a tax free inheritance to your beneficiaries, helping to preserve your legacy and safeguard your family's financial future. Then of course, you also have charitable giving. Policies can be structured to facilitate charitable giving, allowing you to leave a lasting impact in a very tax efficient manner for generations. These advantages underscore the impact a specially designed life insurance policy can have as an integral component of a comprehensive financial strategy offering flexibility and security. It serves as a potent wealth management instrument that equips high income professionals to manage their unique financial intricacies, help bolster their financial resilience and instill confidence in their fiscal future. A common pushback against using life insurance as an accumulation vehicle is the perception that it is expensive and takes a long time to accumulate substantial cash values. This perception is largely rooted in experiences with traditional life insurance policies which are often structured for maximum death benefit rather than rapid cash value accumulation. However, the life insurance policies we're discussing are not your typical off the shelf policy bought from your local property and casualty agent. These strategies that we're talking about here revolve around a specially designed structure with a focus on building high cash values. In these policies, much of your premium goes towards rapidly building up the cash value of your policy rather than paying for the death benefit. So over time the death benefit increases as the cash value grows depending on the structure of the policy. While there is an undeniable cost associated with a special desired life insurance policy, it's crucial to consider this expense in contrast to the potential tax liabilities. Without proper planning, taxes could take a significant bite out of your investment growth. Consider that retirement account distributions are generally taxed as ordinary income. For a high income individual, this can mean losing a substantial chunk of your retirement savings to taxes. Conversely, the cash value growth within a life insurance policy is tax deferred and policy loans taken out are typically tax free. In many cases, the cost of a specially designed life insurance policy could be a mere fraction of what the tax liabilities may be on an investment growth over time. The true cost of these policies become apparent only when considering the full financial picture, including current and future tax burdens, access to cash and long term wealth accumulation. This specially designed life insurance policy offers a unique tool to tackle the double edged sword of tax burdens and liquidity needs that plague high income professionals. It's a powerful option to consider when exploring avenues for efficient wealth management, especially when the alternatives, potential tax liabilities and lack of liquidity are considered. Indeed, a specially designed life insurance policy is not a catch all solution, but rather a tool within the context of a comprehensive wealth management plan. Just as everyone's financial situation and goals are unique, so too should be the approach to financial planning. As high income professionals, you are confronted with distinct financial challenges. However, armed with the right strategy, these challenges can be transformed into opportunities that that pave the way towards greater financial independence and tranquility. It's important to remember that financial planning is a collaborative endeavor rather than a solitary pursuit. A partnership with an experienced advisor offers not only guidance, but also helping to ensure that your strategies are optimized, your approach is personalized and your financial trajectory aligns seamlessly with your unique needs and aspirations. To learn more about these policy designs and whether this is something to consider, visit build banking.com that concludes today's show. I'm Brian Scribonia. Thanks for listening to the Common Sense Financial Podcast.

Thanks for listening to today's show. If you liked what you heard, be sure to subscribe on YouTube and Spotify so that you can receive notifications when we release new episodes. I'm Brian Scribonia and this is the Common Sense Financial Podcast.

Foreign.

Well, thank you for listening to The Forbes Top 10 rated Common Sense Financial Podcast. Before you go, I want to encourage you to jump over to Brian Scribonia.com to access the full archive of blogs and podcasts.

And if you want to be the.

First in line to get new content, you can sign up for free on the Brian Scribonia website as well. If you're not following Brian on all the social channels. We'd love to have you join in on the conversation. Instagram, Facebook, LinkedIn, Twitter he's there.

Lastly, if you've enjoyed listening to today's.

Podcast, or if you have found value in any of our content, help spread the word by sharing our videos, podcasts and posts wherever you get them. We greatly appreciate it and are glad that you took the time to join us today.

Security is offered only by duly registered individuals through Madison Avenue securities, llc, Member FINRA and SIPC Advisory services offered only by dually registered individuals through Scribonia Wealth Management, a registered investment advisor. Tax services offered only through Scribonia Tax Consulting, Mass does not offer Build banking or tax advice. Scribonia Financial Group llc, Scribonia Wealth Management, llc, Scribonia Insurance Services, llc, Scribonia Tax Consulting and Build Banking are not affiliated with mas. Scribonia Wealth Management LLC is a registered investment advisor. Advisory services are only offered to clients and prospective clients where Scribonia Wealth Management LLC and its representatives are properly licensed or exempt from licensure. Investing involves risk, including the potential loss of principal, any references to protection, safety or lifetime income generally referred to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying ability of the issuing carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual situation. BILD Banking is a DBA of Scribonia Insurance Services, llc. Benefits and guarantees are based on the claims paying ability of the insurance company, not fdic. Insured results may vary. Any descriptions involving life insurance policies and its use as an alternative form of financing or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, and may be changed at the discretion of the insurance carrier, general partner and or manager and are not intended to reflect guarantees on securities performance. The term build banking, private banking alternatives or specially designed life insurance contracts are not meant to insinuate that the issuer is creating a real bank for its clients or communicating that life insurance companies are the same as traditional banking institutions. This material is educational in nature and should not be deemed as a solicitation of any specific product or service. Build Banking is offered by Scribonia Insurance Services, LLC only and is not offered by Madison Avenue securities, llc. Our firm is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the US Government or any governmental agency. The information and opinions contained herein provided by the third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. References to Build Banking, private banking alternatives, or specially designed life insurance contracts are not meant to insinuate that the issuer is creating a real bank for its clients or communicate stating that life insurance companies are the same as traditional banking institutions. This material is informational in nature and should not be deemed as a solicitation of any specific product or service. Build Banking is not FDIC insured. Build Banking is offered by Scribonia Insurance Services, LLC only and is not offered by Madison Avenue Securities, LLC nor Scribonia Wealth Management, LLC.