Most of us are working hard every day for our money. But sometimes we forget to make our money work hard for us. Our financial resource Carl Carlson, CEO and founder of Carlson Financial, gave us ideas on how to do just that using a Single Premium Life Insurance Policy.
Carlson said there is currently over $5 trillion sitting in cash and earning nearly nothing.
He said, “So, lets say you want to have your money safe and liquid but still want to earn a decent return then a Single Premium Life Insurance Policy may be what you want. Let’s say you have $100,000 sitting in a money market account earning .1%. Then in this case, you would take that $100,000 and pay a single premium into a life insurance product. This product has different types of indexes, like the S&P 500 that determine how much interest it will make each year. Also, it can be set up so you can’t lose money. In order to qualify for it, you must be able to qualify for the life insurance and probably shouldn’t be a smoker. It could be written on your life or your spouse's life, whoever is healthier.”
You may be wondering if the money is liquid, aren’t there significant penalties to surrender it early?
Carlson said with this product you can add a rider that allows you to surrender it at any time without penalties. It also comes with a death benefit, so maybe if you put $100,000 in, it might have a $150,000 death benefit that if you suddenly passed away would be paid to your beneficiaries tax free. But we don’t use it for that in this case; it’s just an additional feature.
Based on some of the historical numbers, it would be reasonable to think you could earn around 3% or more per year.
Compared to .1% on a savings account, this is safe, it’s liquid and it could credit a decent interest rate, Carlson said.
“This is how we make sure our money is working just as hard for us as we had to work for it,” he added.
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