Leveraged Life Insurance
Leveraged Life Insurance is a strategy designed to create a pool of retirement funds that can be used
tax-free. It is best suited for individuals who are in a high marginal tax bracket, need life insurance, want to support their retirement income with tax-free dollars and have an investment horizon of 15 to 20 years.

How it Works

1. Take out a Universal Life policy with a side fund that allows you to accumulate tax deferred cash values.
2. Accumulate as much money in the policy as possible.
3. Later, at retirement, take out a bank loan or series of loans using the cash value in the policy as collateral. Instead of paying interest, arrange for the bank to add it to the loan's outstanding balance.
4. Use your bank loan proceeds, which are not taxable, to meet your retirement expenses.
5. When you die, the bank loan is repaid with the life insurance (augmented by the cash surrender value (CSV) from the contract with the balance going to your beneficiaries tax-free.