Would You Buy a $201 Million Life Insurance Policy?
An unnamed Silicon Valley billionaire just purchased the largest life insurance policy ever:
…And odds are you would do the same.
(To give you quick background, the purchase was arranged by the SG financial services firm in Palo Alto, its world-record status was just announced by Guinness, and the life insurance is intended to cover estate taxes.)
Since the purchaser is remaining anonymous for security reasons, I do not know the particulars of his estate.
Nonetheless, because he purchased life insurance to protect this estate, we can tell a lot about his values.
YOU build it, YOU direct it
Let’s suppose he has a business, or a number of businesses.
He worked hard to build something.
His company is changing the marketplace.
He probably put his personal credit on the line to get funding.
Maybe he even bought an existing company or two so they could grow big.
He became responsible for the employment and career advancement of many, many people, and the return on investment of a lot of money.
He has earned the right to direct his share of this enterprise as he sees fit.
When his last day on this earth comes, his heirs should be positioned to dispose of this share as per his wishes.
They should not have to liquidate these assets in a fire sale just to pay estate taxes.
Once you have built an “empire,” you have, in my opinion, earned the right to direct the future of that empire.
You could and should be very charitable in how you use your money…
…But the beneficiaries of your generosity should be of your own choosing. They should not be determined by the government.
It’s a smart financial move
Is it possible that his estate could have $200 million of cash available to pay his estate tax obligation?
Sure it is. But does that make financial sense?
Why pay taxes dollar for dollar when you can pay them for cents on the dollar?
Let’s suppose the insurance costs him $5 million per year.
He could pay out that money for the next 20 years and still have paid out only $100 million for a $200 million benefit.
If he had not bought the life insurance, he would have to pay the full $200 million estate tax.
Don’t let the big numbers dazzle you
Most people on this planet are not (yet) billionaires.
But don’t let these big numbers dazzle you.
The same reasoning applies whether you are worth $1 billion, $1 million or a thousand dollars.
What’s yours is yours.
What you have built is for you to direct into the future.
Your achievements can continue to make their mark and help future generations.
This forward-thinking gentleman has made sure that his accomplishments remain profitable far into the future.
Life insurance is helping him protect this legacy by satisfying the taxman in a very economical way.
What do YOU want to protect for future generations?