A Blueprint for Financial Freedom
A Blueprint for Financial Freedom
The Salus Method
Building financial freedom and generational wealth isn’t just about making money; it’s about creating a structure that can sustain and grow your wealth over time. The Salus Method offers a step-by-step approach to financial planning, tailored for middle-class and blue-collar Americans, using principles that have long been secrets of the wealthy. By following this method, you can build a strong financial foundation, generate passive income, and ensure your family’s future.
The Foundation: Life Insurance
Life insurance also offers additional benefits through riders and living benefits, which enhance its value and flexibility:
Living Benefits: These allow policyholders to access a portion of the death benefit while still alive, in cases such as terminal illness, chronic illness, or critical illness. This ensures financial stability during health crises.
Riders: Optional features that can be added to customize your policy. Common riders include:
Accelerated Death Benefit Rider: Provides access to a portion of the death benefit if diagnosed with a terminal illness.
Waiver of Premium Rider: Waives premiums if the policyholder becomes disabled and unable to work.
Long-Term Care Rider: Covers long-term care expenses, such as nursing home or in-home care costs.
Child Term Rider: Provides coverage for children under the policyholder’s plan.
Guaranteed Insurability Rider: Allows the policyholder to purchase additional coverage at specific intervals without a medical exam.
Real-Life Example: Kevin, a truck driver, added a long-term care rider to his life insurance policy. Years later, he developed a condition requiring in-home care. The rider covered the expenses, ensuring he didn’t have to deplete his savings.
Real-Life Example: Maria, a nurse, used the accelerated death benefit from her policy to cover medical bills during her battle with a critical illness, allowing her to focus on recovery without financial stress.
Why Whole Life or Max-Funded IUL is Typically the Best Option
Whole life insurance and Max-Funded Indexed Universal Life (IUL) policies offer unparalleled benefits compared to term or final expense policies. While term and final expense insurance have their place, they lack the long-term wealth-building potential of permanent policies:
Whole Life Insurance: Offers guaranteed death benefits, level premiums, and cash value accumulation. The cash value grows at a guaranteed rate, providing a stable and predictable financial tool.
Max-Funded IUL: Combines the benefits of life insurance with the growth potential of index-based investments. It allows policyholders to grow tax-deferred cash value, participate in market gains up to a cap, and avoid losses due to market downturns.
Advantages Over Term Insurance:
Term insurance is affordable and provides coverage for a specific period, but it does not build cash value. Once the term ends, the policyholder may face significantly higher premiums to renew coverage.
Why Term Insurance is Still Important and How It Complements Whole Life
While term insurance lacks the wealth-building features of whole life or IUL policies, it serves a vital purpose in a comprehensive financial plan. Term policies can provide significant coverage at an affordable cost, making them ideal for:
Temporary Needs: Covering large financial obligations like mortgages, college tuition, or business loans during critical earning years.
Income Replacement: Ensuring your family can maintain their standard of living if you pass away unexpectedly.
Stacking Term with Whole Life: Many people combine term insurance with whole life or IUL policies to balance affordability and long-term benefits. For example:
Layering Coverage: Use a term policy to provide extra coverage during high-need years (e.g., when children are young) while a whole life or IUL builds cash value for future needs.
Real-Life Example: David, a firefighter, purchased a $1 million 20-year term policy to ensure his mortgage and children’s education would be covered if something happened to him. At the same time, he invested in a whole life policy, which built cash value for retirement and left a legacy for his family.
Importance of Final Expense Insurance and Its Benefits
Final expense insurance is specifically designed to cover end-of-life costs, such as funeral expenses, medical bills, and outstanding debts. While it does not offer the wealth-building features of whole life or IUL policies, it plays a crucial role in ensuring your family is not burdened financially during an already difficult time.
Immediate Coverage: Final expense insurance provides quick payouts, ensuring funeral and burial costs are covered promptly.
Affordable Premiums: It’s often easier to qualify for final expense insurance, making it accessible for individuals who may not qualify for other policies due to health issues.
Peace of Mind: Ensures that families do not have to argue over how to handle expenses or take on debt to pay for a loved one’s final arrangements.
Why It’s Important: Without final expense insurance, families are often left scrambling to cover end-of-life costs. This can lead to significant financial strain and even family conflict if there is disagreement over who is responsible for these expenses. Unpaid debts can leave a lasting impact on your loved ones, potentially causing long-term financial hardship.
Real-Life Example: After John’s unexpected passing, his family was shocked to discover he had no life insurance. His children argued over who would pay the $15,000 funeral bill, causing a rift that lasted years. In contrast, his neighbor Frank had a final expense policy that covered all costs, leaving his family free to grieve without financial stress.
How It Complements Other Policies: Final expense insurance can act as a safety net, ensuring immediate costs are covered while larger policies like whole life or IUL address long-term wealth-building and legacy planning.
Advantages Over Final Expense Insurance:
Final expense insurance is designed for small death benefits, typically covering funeral costs. It’s useful for immediate needs but does not offer the wealth-building features of whole life or IUL policies.
Real-Life Example: Sarah, a single mother working as a teacher, set up a Max-Funded IUL with the help of a financial advisor. Over 15 years, she accumulated $75,000 in cash value, which she used to help her daughter pay for college without taking on student loans. Additionally, the policy ensured her daughter would be financially secure in the event of Sarah’s untimely passing.
Real-Life Example: Tom, a business owner, opted for whole life insurance to protect his family and business. Over 20 years, the cash value grew significantly, and he used it as collateral to secure a business expansion loan, which doubled his income.
Whole life insurance and Max-Funded Indexed Universal Life (IUL) policies offer unparalleled benefits compared to term or final expense policies. While term and final expense insurance have their place, they lack the long-term wealth-building potential of permanent policies:
Whole Life Insurance: Offers guaranteed death benefits, level premiums, and cash value accumulation. The cash value grows at a guaranteed rate, providing a stable and predictable financial tool.
Max-Funded IUL: Combines the benefits of life insurance with the growth potential of index-based investments. It allows policyholders to grow cash value tax-deferred, participate in market gains up to a cap, and avoid losses due to market downturns.
Advantages Over Term Insurance:
Term insurance is affordable and provides coverage for a specific period, but it does not build cash value. Once the term ends, the policyholder may face significantly higher premiums to renew coverage.
Advantages Over Final Expense Insurance:
Final expense insurance is designed for small death benefits, typically covering funeral costs. It’s useful for immediate needs but does not offer the wealth-building features of whole life or IUL policies.
Real-Life Example: Sarah, a single mother working as a teacher, set up a Max-Funded IUL with the help of a financial advisor. Over 15 years, she accumulated $75,000 in cash value, which she used to help her daughter pay for college without taking on student loans. Additionally, the policy ensured her daughter would be financially secure in the event of Sarah’s untimely passing.
Real-Life Example: Tom, a business owner, opted for whole life insurance to protect his family and business. Over 20 years, the cash value grew significantly, and he used it as collateral to secure a business expansion loan, which doubled his income.
Life insurance also offers additional benefits through riders and living benefits, which enhance its value and flexibility:
Living Benefits: These allow policyholders to access a portion of the death benefit while still alive, in cases such as terminal illness, chronic illness, or critical illness. This ensures financial stability during health crises.
Riders: Optional features that can be added to customize your policy. Common riders include:
Accelerated Death Benefit Rider: Provides access to a portion of the death benefit if diagnosed with a terminal illness.
Waiver of Premium Rider: Waives premiums if the policyholder becomes disabled and unable to work.
Long-Term Care Rider: Covers long-term care expenses, such as nursing home or in-home care costs.
Child Term Rider: Provides coverage for children under the policyholder’s plan.
Guaranteed Insurability Rider: Allows the policyholder to purchase additional coverage at specific intervals without a medical exam.
Real-Life Example: Kevin, a truck driver, added a long-term care rider to his life insurance policy. Years later, he developed a condition requiring in-home care. The rider covered the expenses, ensuring he didn’t have to deplete his savings.
Real-Life Example: Maria, a nurse, used the accelerated death benefit from her policy to cover medical bills during her battle with a critical illness, allowing her to focus on recovery without financial stress.
The cornerstone of the Salus Method is life insurance. It provides immediate financial security and a legacy for your loved ones. A well-structured life insurance policy, such as a permanent life insurance policy or a Max-Funded Indexed Universal Life (IUL) policy, serves multiple purposes:
Protection: Ensures your family’s financial needs are met in case of unexpected loss.
Wealth Accumulation: A Max-Funded IUL allows for tax-deferred growth, leveraging market gains without the risk of loss.
Cash Value Access: Policyholders can borrow against the cash value for tax-free loans.
Real-Life Example: Sarah, a single mother working as a teacher, set up a Max-Funded IUL with the help of a financial advisor. Over 15 years, she accumulated $75,000 in cash value, which she used to help her daughter pay for college without taking on student loans. Additionally, the policy ensured her daughter would be financially secure in the event of Sarah’s untimely passing.
Level Two: Disability Insurance
Disability insurance is your safety net in case of injury, illness, or other circumstances that prevent you from working. It replaces a portion of your income, ensuring your financial plan stays on track even if you’re unable to work for an extended period.
Protection: Covers essential expenses such as mortgage payments, utilities, groceries, and other recurring bills.
Flexibility: Policies can be tailored for short-term or long-term coverage depending on your specific needs.
Why Disability Insurance Is Vital for Women: For women planning a family, purchasing disability insurance before becoming pregnant can provide critical coverage during maternity leave, especially if unforeseen complications arise that prevent a return to work. Pregnancy itself is not considered a qualifying condition for coverage if the policy is purchased after conception, making proactive planning essential.
Real-Life Example: Laura, a retail manager, purchased disability insurance before starting her family. When complications during her pregnancy required extended bed rest, her policy replaced 60% of her income. This financial security allowed her to focus on her health and her baby’s well-being without the stress of unpaid bills or dipping into savings.
Real-Life Example: Mark, a construction worker, injured his back on the job and was unable to work for eight months. His short-term disability insurance covered 60% of his income, which allowed him to pay his mortgage, utilities, and medical bills without dipping into his emergency savings.
Disability insurance is your safety net in case of injury or illness that prevents you from working. It replaces a portion of your income, ensuring your financial plan stays on track even if you’re unable to work.
Protection: Covers essential expenses and prevents you from depleting savings or falling into debt.
Real-Life Example: Mark, a construction worker, injured his back on the job and was unable to work for eight months. His short-term disability insurance covered 60% of his income, which allowed him to pay his mortgage, utilities, and medical bills without dipping into his emergency savings.
Level Three: Retirement Accounts
After securing the foundation, it’s time to grow your wealth through retirement accounts such as 401(k)s, IRAs, Roth IRAs, and fixed indexed annuities (FIAs).
Tax Advantages: Contributions to 401(k)s, IRAs, and FIAs are often tax-deductible, and growth is tax-deferred.
Guaranteed Income: FIAs provide a guaranteed income stream for life, making them an attractive option for retirees.
Market Protection: FIAs offer a floor that protects your principal investment from market downturns while allowing participation in market gains up to a cap.
Flexibility: FIAs can be tailored to suit your retirement goals, providing predictable and secure income.
Why FIAs Can Be Better: Unlike 401(k)s and traditional IRAs, which are subject to market volatility, FIAs ensure your principal is protected even during market downturns. With caps on market gains, they provide stable growth while eliminating risk. Additionally, annuity payouts can be structured for lifetime income, ensuring you never outlive your money. Tax deferral on growth further enhances their appeal as a retirement strategy.
Real-Life Example: James, a factory worker, diversified his retirement strategy by rolling over a portion of his 401(k) into a fixed indexed annuity. This ensured he had a guaranteed income stream in retirement while still leaving other investments in the market for growth. When the market experienced a downturn, James’s FIA payments remained stable, providing him with peace of mind.
Real-Life Example: Lisa, a nurse, contributed 15% of her income to her 401(k), including an employer match of 5%. Over 25 years, her account grew to over $600,000, providing a stable foundation for her retirement years. She complemented her savings with a fixed indexed annuity, which offered protection from market losses and guaranteed a portion of her retirement income.
Level Four: Diversified Investments
Diversify your portfolio with assets that provide growth and passive income. This level focuses on expanding your wealth through various investment vehicles:
Stocks
Investing in individual stocks or ETFs offers long-term growth potential.
Real-Life Example: John, a factory worker, consistently invested $200 monthly into a diversified S&P 500 ETF. After 20 years, his investment had grown to over $150,000 thanks to consistent contributions and market appreciation.
Cryptocurrency
Cryptocurrency offers high-risk, high-reward opportunities.
Real-Life Example: Emma, a small business owner, allocated 5% of her portfolio to Bitcoin and Ethereum. She saw substantial gains during market upswings but ensured her other investments remained diversified to balance the risk.
Precious Metals
Gold and silver serve as a hedge against inflation and economic downturns.
Real-Life Example: Paul, a retired electrician, invested in gold ETFs during a period of economic uncertainty. This move preserved his wealth while other assets fluctuated.
Real Estate
Investing in rental properties or REITs (Real Estate Investment Trusts) can generate consistent cash flow.
Real-Life Example: Maria and Juan purchased a duplex in their neighborhood. They lived in one unit and rented out the other. The rental income covered their mortgage, and over time, they built equity in the property, which they later sold for a profit.
Venture Capital
Invest in startups with potential for high returns.
Real-Life Example: Michael invested $10,000 in a local tech startup through a crowdfunding platform. Five years later, the company was acquired, and his investment turned into $50,000.
Level Five: Trusts for Generational Wealth
Trusts are essential for protecting assets and ensuring smooth wealth transfer. Different types of trusts serve different purposes:
Revocable Living Trust: Allows flexibility during your lifetime and avoids probate.
Real-Life Example: Jane used a living trust to manage her estate, ensuring her children inherited her home and investments without lengthy court proceedings.
Irrevocable Trust: Offers tax advantages and asset protection.
Real-Life Example: The Smith family placed their vacation home in an irrevocable trust to shield it from creditors and reduce estate taxes.
Special Needs Trust: Provides for a dependent with special needs without jeopardizing government benefits.
Real-Life Example: Tom and Linda created a special needs trust for their son, ensuring he had financial support while maintaining access to healthcare assistance.
Charitable Trust: Supports causes you care about while offering tax benefits.
Real-Life Example: A retired business owner set up a charitable trust to fund scholarships for local students, reducing his estate taxes and leaving a legacy of education.
Building Long-Term Passive Income
Focus on investments that generate ongoing cash flow:
Real Estate: Rental properties provide steady income and appreciate over time.
Example: James, a truck driver, bought a single-family home in a growing area and rented it out. Over 10 years, the rent increased steadily, covering the mortgage and generating passive income.
Dividend Stocks: Regular payouts from companies can supplement income.
Example: Karen invested in high-dividend utility stocks, which provided her with consistent quarterly income during retirement.
IUL Loans: Borrow against your policy’s cash value for tax-free income.
Example: David, an electrician, used his IUL’s cash value to fund a home renovation without triggering a taxable event.
Business Ventures: Partner in businesses with consistent revenue streams.
Example: Sandra invested in a laundromat with reliable cash flow, generating passive income while she maintained her day job.
Why the Wealthy Keep This Method Secret
The Salus Method is based on strategies used by the wealthy, who often rely on financial advisors to implement these plans. By prioritizing long-term planning, leveraging tax advantages, and diversifying investments, they build generational wealth while minimizing risk.
For middle-class Americans, access to this knowledge has been limited by a lack of education and resources. The Salus Method demystifies these strategies, empowering you to take control of your financial future.
Professional Guidance: Why It Matters
When applying for any type of insurance or making decisions about transferring money into different markets, it is crucial to consult a professional. A licensed and vetted financial planner or advisor can provide personalized guidance based on your unique financial goals and circumstances. They can help you navigate complex options, ensuring that you make informed decisions to protect and grow your wealth.
At Salus, we have a network of vetted financial advisors and attorneys who are dedicated to helping you achieve your financial goals. Whether you need assistance with life insurance, retirement planning, or setting up trusts, our team is here to provide expert support and guidance.
Written by: Stephen Paul, Founder and Senior Underwriter, Salus Insurance Advisors
Conclusion
The Salus Method isn’t just a financial plan; it’s a legacy. By starting with a strong foundation, layering on protection, and investing wisely, you can achieve financial freedom and create generational wealth. Whether you’re a blue-collar worker or middle-class professional, these principles can transform your financial future and provide security for generations to come.
The Salus Method isn’t just a financial plan; it’s a legacy. By starting with a strong foundation, layering on protection, and investing wisely, you can achieve financial freedom and create generational wealth. Whether you’re a blue-collar worker or middle-class professional, these principles can transform your financial future and provide security for generations to come.
