21/01/2021
Even Billionaires need insurance policies to protect their vast assets, massive homes, golf courses, businesses and huge liquidity needs.
An untimely death can force the purchaserâs estate to liquidate assets at an inopportune time to raise enough money to pay off leveraged loans, business expenses and other debts including income and estate taxes. Federal taxes alone may eat up to 45 percent of an heirâs inheritance. Also, most wealthy individuals have their estates tied up in hard assets and may not have the liquidity immediately available to pay such a large tax bill. Life insurance can provide the money to pay off the tax obligations rather than liquidating more valuable growth and income-producing assets.
Frequently when talking about the benefits of life insurance for entrepreneurs and businesses, we share the stories of famous brands started or saved by life insurance. Walt Disney after failing to secure financing for the building of his dream amusement park Disneyland, collaterally borrowed a large part of it from his cash value life insurance policy. James Cash Penney, the founder of retail giant J.C. Penney, borrowed against his cash value life insurance policy to keep his company afloat when the Great Depression left his company in financial ruin. Entrepreneur Ray Kroc, founder of McDonaldâs, borrowed money from two of his cash value life insurance policies to help overcome cash flow problems, to pay his employees and to start his Ronald McDonald advertising campaign.
Read full article here: https://www.rbernstein.com/blog-01/even-billionaires-buy-life-insurance