How Life Insurance Can Help You Build Wealth
True wealth is not of the pocket, but of the heart and of the mind ~ Kevin Gates
Building wealth is an aspiration for many of us. With incremental wealth comes incremental choices-better schools for our children, better homes for our families and a higher quality of life for the people we love.
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The secret to building wealth lies in choosing an investment that provides reasonable returns with minimal risk. A life insurance policy is an excellent aid in your wealth building journey because it provides you with cover against any unforeseen circumstances that may arise including death or disability.
In this article, we are going to:
- Explain what wealth is and give you some tips on how to build wealth.
- Explain how life insurance can help you as you build wealth.
What is wealth and how do I build it?
Wealth is defined as the total value of assets owned by an individual. However, we consider someone wealthy if they can take care of their family’s needs and live a fruitful life. Building wealth is a long process that requires a lot of commitment and financial discipline.
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A few important tips to note before you start your wealth building journey are:
- Learn to budget. A budget helps you to know how your money is spent and where you can cut down on your expenditure.
- Start by building an emergency fund, ideally 6 months to 1 year of living expenses. This is money you set aside for emergencies. This will prevent you from digging into your investment to settle unforeseen events.
- Start investing as soon as possible. As the saying goes, the best time to start saving was yesterday, the next best time is today.
- Think long term. Learn to prioritise long term fulfilment over short-term gratification.
How can life insurance help me as I build wealth?
Life Insurance is an important tool to protect your family and investment from any uncertainties that may arise in the future. A life insurance policy essentially transfers the risk from you to an insurance company keeping you safe.
Here is how life insurance can help you in your journey to financial freedom.
- The government offers a tax relief equivalent to 15% of the premium paid to a maximum of Ksh 60,000 per year to life insurance policy holders and Ksh 20,000 per month (maximum Ksh 240,000 per year) to pension plan holders. This money can be used for other investment activities.
- Pension plans like Jubilee Insurance’s Personal Pension Plan have a guaranteed rate of return. This makes them ideal in building wealth for risk averse people.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product.
Written by Anthony Adungo- Digital Sales and Marketing Officer, Jubilee Life Insurance on 14th October 2021