Why Life Insurance?

A properly structured life insurance contract can be a very powerful retirement wealth building tool. This strategy offers the following advantages:

1. Cash value grows tax free and can be removed tax free
2. Your money is protected from investment losses or downturns in the stock market
3. Your money can earn a rate of return pegged to the S&P 500 without being invested in the market. (It has averaged approximately 8.5% the past 25 years.)
4. The policies are 100% principal protected on the cash in the policy and will not go backwards due to a negative downturn in the stock market
5. Interest crediting is based on a “lock and reset” feature where your investment gains are locked in each year
6. The premium payments are flexible and a policy can be designed to allow the owner to choose when and how much premium is to be paid each year.
7. The cash value is allowed to grow without mutual – fund expenses or money-management fees
8. The policy provides tax free death benefit for your family or beneficiaries.

Many of our clients wonder why they never heard of this strategy before. The biggest reason is because most investment advisors are managers of money. Insurance products are not invested in the stock market and therefore do not need to be "managed". Consequently, if you invest in these alternative types of products , money managers do not benefit from annual mutual fund expenses and money management fees. They earn these fees whether your investments were positive or negative that year. Many broker-dealers are actually forbidden from even discussing and acknowledging that these alternative products may and possibly should be a part of a truly diversified portfolio.

Having these safer, more secure products doesn't mean sacrificing investment interest yield. According to a Dalbar study (www.dalbar.com ) the average mutual fund investor earned a paltry 1.87% return the past 20 years while the actual S&P 500 averaged 8.35%. A properly structured life insurance contract participates in the market upside potential (with a cap) with downside protection and minimum guarantees in soft market years. Some of our products will actually credit up to 140% of the annual S&P 500 index change.

We believe that any portfolio should have safe, secure wealth building products as part of its strategy. Having this diversification will help avoid or minimize the impact of a bear market on their portfolios, especially for clients in or near retirement when an unexpected and untimely stock market correction occur.