How To Build Generational Wealth With Insurance In Jamaica
For many of us building generational wealth is the big end goal on our list of financial goals. We all want to leave our families behind with the ability to sustain themselves as well as they did when we were alive. But what if I told you building generational wealth is as simple as saving for a trip to Bora Bora. But instead of saving in a taxable account you can save using insurance plans. Today I’ll be sharing how you can build generational wealth with life insurance.
After a recent discussion with a Jamaican insurance agent, I learnt a few new things about insurance arrangements in Jamaica and how you can actually use them to build wealth.
What is generational wealth?
Generational wealth is any asset passed on from generation to generation.
These assets include:
- A business
Related: Saving Goals Every Millennial Should Have
How can a life insurance policy help me build generational wealth?
A life insurance policy is an insurance plan that provides the insured with a way to allocate money to decided loved ones (beneficiaries) in the event of one’s death.
In other words, when you buy a life insurance policy you are making a conscious decision to help your chosen beneficiaries to live without a loss of income.
Let’s look at this example;
Assuming your spouse is your sole beneficiaries if you two shared a home with a mortgage your death benefit would allow them to repay the mortgage and live ordinarily/ unaffected by your death financially.
However, if there was no life insurance benefit to be received your spouse would likely struggle to make mortgage payments (as well as other unsettled bills) and the house may be repossessed.
To build wealth through life insurance plans you’ll need to:
- Have multiple policies ( as many as you can afford or increase your coverage as you can afford to)
Having one allows you to pay off the mortgage but having two may allow you to set up a trust for your child’s education. Imagine having two life insurance policies valued at JMD$10 million each to offset your family’s loss
2. Start young
Currently in Jamaica when it comes to buying life insurance the younger you are the cheaper it is. However you must be at least 18 and to buy insurance. You can start with just about JMD$5000 and get JMD $5 million insurance coverage.
3. Choose trustworthy beneficiaries
Always choose beneficiaries that will honour your wishes that can also manage money well. Don’t be afraid to change your beneficiaries at any time if you need to. For beneficiaries under the age of 18 trustees must be appointed. Appoint a trustee you can really trust.
Related: How To make Money Blogging In Jamaica
If you’re thinking of buying a home in Jamaica and need to go through the mortgage process you’ll need life insurance. The mortgager uses this policy as collateral. Which is another good reason to have more than one life insurance policy.
Essentially using life insurance to build wealth is all about leaving cash behind. Life insurance is a safe way to ensure your family will be ok after you’re gone. The amount you leave is up to you.
The Balance is a good resource for further information on the benefits of using insurance.
Did you know that new critical illness plans can’t be accessed after you’ve had a critical illness?
It’s no secret that insurance works best for you if nothing ever goes wrong. Because if something does go awry there goes your insurance premium skyrocketing through the roof. Similarly, insurance agencies are far less likely to offer coverage for a person who has proven to be critically ill because the illness is likely to affect them again.
The standard critical illness insurance plan is a policy that offers the insured a one-time lump sum payment for use in the event of diagnosis of a critical illness (e.g. cancer, coronary artery bypass surgery, heart attack, stroke, kidney failure… etc.). Most insurers cover between 8-20 critical illnesses.
If you’re prone to having any of these illnesses and would like to have more than one policy, your best option is to buy two or more policies while you’re still healthy.
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