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Have you considered the risks of storing capital in a whole life insurance policy?

Whole life insurance is my favorite asset for long-term capital protection and resilience.

However, like any asset, it’s vital to understand the potential risks. Here are 3 common risks and how to mitigate them:

1. Set-up costs:

• Whole life insurance policies have initial costs, meaning you won’t have access to all the money you put in at first.

🛡️ Mitigation: If you need access to funds quickly, keep some money outside the policy (e.g., if you need access to $100k relatively quickly, don’t put all $100k into the policy upfront).

2. Policy lapsing:

• If you don’t pay your premiums when due or allow policy loan values to exceed the cash values, your policy may lapse with potential tax implications.

🛡️ Mitigation: Pay your premiums and policy loans on time, and strategize with your agent to prevent lapsing. Facing hard times? Contact your agent before your policy lapses; there might be options to help you avoid it.

3. Modified Endowment Contract (MEC):

• Your policy could become a MEC if you store too much capital inside it, which might not align with your financial goals and could lead to tax and penalty implications.

🛡️ Mitigation: Make sure your agent understands the implications of a MEC and can help you avoid this outcome if it’s not what you want.

These 3 risks highlight the importance of engaging with a professional to ensure you fully understand what you’re purchasing (I can help).

What else do you want to know about using whole life insurance as a long-term, resilience-building capital storage asset?

Do you have someone on your team helping you with these concepts? If not, please reach out to us at