What is a HENRY?
HENRY is an acronym that stands for High Earner Not Rich Yet. High earners, not rich yet (HENRYs) are individuals who currently have significant discretionary income and a strong chance of being wealthy in the future. Many professionals, including lawyers, doctors, dentists and so on, have the potential to be HENRYs due to the income range for their professions. The fact that much of their future wealth is projected off of a six-figure income rather than income generating assets makes the HENRYs the “working rich”, meaning they won’t be as rich if they stop working. More of a HENRYs earnings go into costs than go into wealth building investments, leaving them feeling like they are more like regular people slaving for a paycheck than the wealthy 1% in America.
Why would a HENRY get a Universal Life Insurance Policy?
In the world of a HENRY being flexible can be vital. With rising costs of living in big cities, expanding their families, paying down student loans, and keeping up with the latest social trends having flexibility when paying for a life insurance contract can come in handy. One of the most attractive features of universal life insurance is the ability to choose when and how much premium you pay, as long as payments meet the minimum amount required to keep the policy active Unlike other types of permanent life insurance contracts (whole life), universal life can adjust to fit your financial needs when your cash flow is up or when your budget is tight. You can:
- Pay higher premiums more frequently than required
- Pay less premiums less often or even skip payments
- Pay premiums out-of-pocket or use the cash value to pay premiums
Cheaper Cost vs Whole Life Policies
When trying to live your life to the fullest while trying to keep expenditures down and still protect your family from financial disaster having a cost-effective life insurance contact can help HENRY’s. Compared to whole life insurance contracts, universal life insurance contracts are consistently cheaper. This can help HENRY’s save money on life insurance and use funds to pay down any debt, expand their family without going into debt, save more money for retirement, and save for a down payment for a house if that is one of your dreams.
Access to Cash Value
A universal life policy accumulates cash value from a portion of your premium payments and the variable interest rate at which the policy grows. So when you make higher premium payments, more money goes toward the policy’s cash value. If the policy’s interest rate grows higher than expected, then the cash value builds more quickly Unlike a bank loan where you have to qualify based on your credit, you don’t need to qualify to take a loan out on a life insurance policy. This is standard with all policies that build cash value. You also don’t need to repay the loan. Another advantage is you usually don’t have to pay income tax on the loan. If you want to withdraw cash without it surrendering or canceling the policy, you can do so through a partial withdrawal. Partial cash withdrawals are usually tax-free.
When navigating finances as a HENRY life insurance is one topic that is often overlooked. This can put a big hole in an otherwise sound financial plan for you and your family. Be sure to reach out to see if a universal life insurance policy would be the best policy out there for you.