Insurance is important for billionaires than for low net worth persons as it helps them safeguard their vast assets, massive homes, and golf courses. Also, their businesses and their extensive liquidity requirements can benefit a lot from insurance policies. It reported that a silicon valley business mogul bought life insurance worth $201 million and this entered into the Guinness book of record as the world’s biggest life insurance purchase by a living person. Because of the massive financial value which this life insurance coverage had, it had to be underwritten by 19 insurers.
It can be mind-boggling as to why high net worth persons would purchase a life insurance policy of that amount. The reasons are simple: to protect their assets and ensure that their loved ones can have enough financial non-financial assets when they pass on to continue their life with. It’s also about making the most from tax savings and estate planning.
Life insurance provides funds to pay off leveraged loans
Also, wealthy people take leveraged loans to build their business empires, and in most instances, these loans are negotiated to be repaid after one’s demise. But if this happens at an inopportune time, this could mean that the dependents will have to sell off most of their assets and liquidate other investments to enable them to pay off the loans. Also, there will be business debts, estate taxes, and income taxes that will need to be paid, and this is where having a considerable amount of life insurance can help.
Ensures that growth and valuable assets are not liquidated
The last thing that a wealthy person and their families would want to do is to have their income-producing assets sold or liquidated to pay off debts. They will ensure that they have enough life insurance coverage to offer security just in case something unexpected happens.
Life insurance creates liquid cash immediately after death
Rich families often lead an expensive lifestyle, and it’s common for them to sell their real estate and other assets to maintain their lifestyle after the demise of their wealthy provider. But when there is life insurance coverage, this will provide immediate cash for the dependents, so there will be no need to sell any family asset.
Life insurance provides funds to salvage businesses
Life insurance policies, especially cash value life insurance policies can be used to secure loans. There are many business owners globally who have used this type of life policy to get the loans that they want and salvage their businesses. This is often used as a last resort when policyholders cannot find other sources of financing for their failing businesses.
Yes, the super-rich purchases a huge amount of life coverage, with the billionaires buoying the most. They mostly shell out up to 5percent of their net worth to safeguard their empire. With the right amount of life insurance, a person can withstand financial turbulence, and ensure that even after his demise, his estate can still pay its taxes and debts without some assets being liquidated.