Using Life Insurance as a Portfolio Preservation Asset

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

We all understand that life has at least two certainties: death and taxes. I’ll add one more: market downturns. Despite the wealth of information available and excellent portfolio strategies employed, events like the subprime market and Brexit will occur and create volatility in an equity-based portfolio. Therefore, one of the most requested strategies from high net worth clients is how to smooth out their retirement cash flow during market downturns. While acting in a fiduciary standard, one strategy to consider is cash value life insurance.

Many retirees have their assets consolidated in two places: the value of their home and their investment portfolio. If most of those retirement assets are invested in the market and a downturn occurs, the retirees fixed income could be impacted. Even worse, those withdrawals may need to be taken from principal, which will affect potential portfolio recovery when markets upswing. To help smooth this situation out, we find that adding cash value life insurance to an overall portfolio – an asset whose performance is not tied directly to the market – can provide an excellent source of income during market downturns.

The strategy is simple: when the market is down, retirement income should be taken from the cash values in a non-correlated, tax-efficient cash value life insurance policy. This strategy seeks to preserve equity-based assets, allowing for the potential recovery of those same assets when markets bounce back. When markets have recovered to the investor’s liking, you may resume taking withdrawals from your stock portfolio and allow the life insurance cash values to build back up to be used during the next market recession.

The primary purpose of life insurance is to provide a death benefit to one’s family however, life insurance can also be used as a risk management tool. Utilizing cash value life insurance can be strategic in smoothing out retirement income and preserving your market-based portfolio in times of financial uncertainty.

Contact a Carson Wealth Advisor for more information.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

5 Reasons It’s Important to Set Financial Goals

Published by Rob Furlong, Portfolio Manager The alarm sounded promptly at 1a.m. Shortly after some rustling and grumbling the tent zippers opened and we stepped out into the frigid air. After a quick breakfast, we began heading uphill into the darkness. For the next eight hours life was lit …

3 Lessons I’ve Learned Working At A Wealth Management Firm

Published by Shayla Kriha Flash back to May 9th 2011, the day I started working at Carson Wealth Management Group. I thought at that time I knew what working in the financial services industry was all about; I could not have been more wrong. It’s now June 2018, and I can truly say I know ex …

Financial Planning Is About the “Why”

Published by Brad Dillon Many of my clients and prospects confuse financial planning with investment management. There are countless financial professionals touting their expertise regarding investments, and in my 20 years in the profession I have had many conversations with prospective cli …

How Emotional Decisions Can Ruin Your Investment Strategy

More money is left behind than lost during market declines. When an investor reacts emotionally to declines, they often pull money out of the market, derailing their investment strategy and leaving them much less exposed to equity markets. Often, these moves are made very near the bottom of …
1 2 3 51 52 53 54 55 106 107 108

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation