Build Wealth with Life Insurance

Do you know about the advantages of life insurance?

one hundred dollar bills for building wealth with life insurance

How do wealthy people use life insurance to their advantage?

Wealthy individuals often use life insurance as part of sophisticated financial planning strategies to minimize taxes, protect their estates, and pass wealth on to heirs. Here are several ways they do this:

1. Tax-Free Death Benefit

The death benefit from a life insurance policy is typically not subject to federal income tax. Wealthy individuals use this to transfer a large sum of money to their heirs tax-free, allowing them to preserve more of their estate. This can be especially useful for covering estate taxes, so that other assets don’t need to be sold to pay those taxes.

2. Irrevocable Life Insurance Trusts (ILIT)

Wealthy individuals often place life insurance policies in an Irrevocable Life Insurance Trust (ILIT). By doing this, the life insurance proceeds are excluded from the individual’s taxable estate. The trust owns the policy, so the death benefit does not count toward the estate’s value, reducing potential estate taxes.

3. Cash Value Accumulation (Permanent Life Insurance)

Whole life or universal life insurance policies accumulate a cash value over time, which grows tax-deferred. Wealthy individuals can borrow against the cash value or withdraw funds without triggering taxes, as long as the policy remains in force. This can serve as a tax-efficient way to access funds during their lifetime without paying capital gains or income taxes.

4. Wealth Transfer and Gift Tax Benefits

Life insurance can be part of a strategy to transfer wealth while minimizing gift taxes. Wealthy individuals can contribute money to an ILIT or another entity, which then uses the funds to pay life insurance premiums. This allows them to transfer assets outside their estate while keeping the life insurance proceeds tax-free for heirs.

5. Premium Financing

Some wealthy individuals use premium financing, where they borrow money to pay the premiums on a large life insurance policy. The policy's death benefit repays the loan, and any excess goes to the heirs tax-free. This allows them to preserve liquidity and avoid using their own capital for premium payments.

6. Charitable Giving

Life insurance can also be used to create tax-efficient charitable donations. By naming a charity as the beneficiary of a life insurance policy, individuals can make significant contributions upon death, while possibly receiving tax benefits for the premium payments during their lifetime.

7. Estate Liquidity

When someone passes away, their estate may be subject to federal or state estate taxes. Life insurance proceeds can provide liquidity to the estate, helping to pay these taxes without forcing the sale of other estate assets, such as property or business interests.

8. Tax-Advantaged Loans

By borrowing against the cash value of a permanent life insurance policy, individuals can access funds without triggering a taxable event. Since loans are not considered income, they can provide a way to access capital without selling investments or paying income taxes.

Life insurance can be a powerful tool for tax minimization, estate planning, and wealth transfer, particularly when structured carefully through trusts, premium financing, and strategic use of cash value.

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What is Gap Insurance?

By Justin Sonon • September 10, 2025

Gap Insurance: Dealer Add-On vs. Auto Insurance Policy — Which Is the Smarter Choice? Buying a new car is exciting, but it also comes with financial risks. The moment you drive off the lot, your vehicle starts to depreciate in value. If your car is ever totaled or stolen, your standard auto insurance typically pays out the actual cash value, not the balance left on your loan or lease. That’s where Gap Insurance comes in. Short for Guaranteed Asset Protection, it covers the “gap” between what your vehicle is worth and what you still owe your lender. Why You’ll Hear About Gap Insurance at the Dealership When you’re finalizing your purchase, the finance manager often offers Gap Insurance as an add-on. Convenience : You can roll it right into your financing paperwork. Cost : This convenience comes at a price. Dealers typically charge $400– $900 as a one-time fee, and because it’s financed, you’ll also pay interest on it. Commitment : Once it’s bundled into your loan, you’re locked into that cost even if your balance drops faster than expected. For example: if you buy a $30,000 SUV and total it a year later when it’s worth only $24,000, but you still owe $28,000, the dealer’s Gap Insurance would cover the $4,000 difference. Useful—but not always cost-effective. Gap Insurance Through Your Auto Insurance Policy What many car buyers don’t realize is that they can add Gap Insurance directly to their auto insurance policy. Lower Cost : Most carriers charge just $20–$40 per year for the same protection. Flexibility : You can add or remove the coverage as your loan balance changes. Same Protection : It covers the same difference between your loan and your vehicle’s actual cash value. In the SUV example above, adding Gap Insurance through your policy would provide the same $4,000 protection—but at a fraction of the cost. Which Option Is Best? If you like convenience and don’t mind paying more, the dealership option works. If you want long-term savings, adding Gap Insurance to your auto policy is almost always the smarter financial choice. At Sonon Insurance , you can explore whether adding Gap Insurance to your auto policy makes more sense for your wallet. Because protecting your vehicle, and your finances, shouldn’t cost more than it has to.

What Is Cancel For Any Reason Travel Insurance Coverage?

By Justin Sonon • August 26, 2025

Why “Cancel for Any Reason” Travel Insurance Might Be the Best Thing Since Rolling Suitcases Picture this: you’ve been dreaming about your big trip. Tickets booked, bags packed, playlist ready. Then life happens, your cat decides to swallow a Lego, your boss suddenly “remembers” a big project, or you realize that a trip to a tropical island during monsoon season wasn’t your brightest idea. Normally, this is when you’d be stuck with the sad sound of money swirling down the drain. But if you’ve got travel insurance with Cancel for Any Reason (CFAR) coverage , you can laugh in the face of chaos (well, at least chuckle a little). The Perks of CFAR Coverage—With a Side of Humor 1. You Don’t Need a Good Excuse Traditional insurance : “Sorry, that doesn’t count unless your appendix explodes mid-flight.” CFAR coverage: “You woke up and decided you’d rather binge-watch Netflix in sweatpants than fly across the ocean? Cool—we’ve got you covered.” 2. You’re Protected From Family Shenanigans Maybe your cousin suddenly schedules their wedding the same week as your dream cruise. With CFAR, you can cancel the trip and still show up awkwardly holding the world’s most boring salad bowl from their registry. 3. Weather Can’t Ruin Your Parade Who among us hasn’t booked a beach vacation only to arrive during torrential rain? With CFAR, you can check the forecast a few days before and bail, saving yourself from 7 days of Monopoly in a damp hotel room. 4. Peace of Mind for the Overthinker For those who like to plan Plan A, B, and C… and a backup Plan D (just in case aliens land), CFAR is like a security blanket. You don’t have to justify your panic. Cancel. Reschedule. Repeat. 5. Because Sometimes, You Just Don’t Feel Like It Life’s unpredictable. Maybe you’re not sick, maybe no one died, maybe nothing dramatic happened…you just don’t want to go anymore. CFAR says, “That’s enough reason for us.” The Fine Print (Without the Boring Lecture) Most CFAR plans will reimburse up to 75% of your prepaid, non-refundable trip costs—as long as you cancel within the allowed timeframe (usually 48 hours before departure). But hey, that’s a whole lot better than the 0% refund you’d otherwise get for your spur-of-the-moment decision to stay home with your dog. Final Boarding Call Travel is supposed to be fun. Worrying about “what if I need to cancel?” isn’t. That’s why Sonon Insurance recommends adding CFAR coverage to your travel insurance, so whether it’s a real emergency or just an “I’d rather not,” you won’t lose everything you invested in your adventure. Because at the end of the day, sometimes the best trip… is the one you didn’t take.