In this episode of the Power of Zero Show, host David McKnight addresses the claim that sees Paul Atkins owning 54 life insurance policies for an astounding 10% of his $327 million net worth.

Someone may ask themselves why someone with such a massive net worth would own so many life insurance policies…and even why someone who has equity in Chinese tech giant Alibaba, holdings in cryptocurrency, and stakes in venture capital firms would also want their wealth growing in cash value life insurance policies.

Looking at Atkins, who’s President Trump’s nominee to chair the Securities and Exchange Commission, can help understand how the ultra-wealthy view taxes and wealth accumulation.

One possibility could be that Paul Atkins may have exhausted all of the usual sources of tax-deferred and tax-free growth available to him through government-sponsored retirement plans. 

Something worth remembering: Cash Value Life Insurance policies don’t have any income threshold, and they have no contribution limits at all.

A second potential scenario that has led Atkins to have over 50 life insurance policies is that he might be looking for a way to diversify his holdings.

David points out to the fact that owning shares in single stocks like Alibaba – like Atkins does – can be a fairly risky proposition.

Cash value and life insurance policies like whole life or IULs, on the other hand, aren’t exposed to market risk.

There’s yet another possibility: Atkins may not be the insured on all the policies.

According to the ethics filings, the cash value of the policies in question ranges from as low as $1,000 to well over $1 million.

For some experts, that may be a sign that Atkins is investing in life settlements.

The final potential scenario is the one in which Atkins owns all the policies for the purpose of estate planning.

David points out that there are many more efficient ways to purchase life insurance policies than buying 54 separate contracts

David shares that he understands the concept of wanting to spread your risk out among multiple carriers, but feels that doing so through the purchase of 54 different policies is a bit extreme.

David points out that diversifying away from the stock market with some of your portfolio is, typically, a good idea.

Want safe and productive growth without the risks associated with traditional bond allocations? Look at cash value life insurance policies, says David.

Remember: cash value life insurance can also be beneficial because many carriers allow you to receive your death benefit in advance of your death.

While it’s true that cash value life insurance isn’t for everyone, Paul Atkins ethics disclosure shows that it can play a critical role in someone’s long-term wealth-building strategy.

 

 

Mentioned in this episode:

David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Paul Atkins

Alibaba