Insurance. Is it a tool that helps strengthen our finances or just another so-so investment product to purchase?
Many people think of Insurance as a product.
A product that eventually - most probably - one day - they will have to think about.
Just one more product that they will have to Google and look at YouTube videos so they can start to comprehend what this product called Insurance is really all about.
So Insurance, is it a tool or a product???
I find when the topic of Insurance comes up, few people understand its full value.
It's usually not seen as a tool that helps us take control and strengthens our finances. Rather, many times its seen as an inadequate investment product to hedge some of life's challenges.
Through my love of cooking I came up with the following metaphor to more clearly explain how Insurance can be thought of as a tool.
Wouldn't it be great to think there's a financial tool that works just like a colander?
Where you can hold on to your portfolio's long term strategy and let the volatility of the markets & life flow through those holes in the colander!
Insurance is a metaphor for that colander; its role is not to let the volatility of the markets & life allow our financial planning to fall through all of those holes.
By including Insurance in our portfolio's makeup we can hold on to our financial long term strategy in times of market volatility and life's events. The proper Insurance in place won't let our financial planning slip through all of the colander's holes.
Working with the concept of Insurance as a tool helps in managing financial risk when life gets in the way of planning.
Recommended Insurance Products:
Term/Participating Whole Life Insurance
Long Term Care Insurance (LTCi)
Hybrid Long Term Care Insurance
Guaranteed Income Annuities
Guaranteed Longevity Annuity Contract
There will always be naysayers when it comes to the concept of strategizing with Insurance.
Their main objection: "You can earn higher returns by investing in stocks, bonds or mutual funds." Yes, you may earn higher returns fully investing in the markets, but just as quickly lose all of those gains.
The Insurance Products I work with are not as dependent on daily market forces as securities and real estate might be. The Insurance Products I recommend are meant to support balancing your financial portfolio; to give you the tools to adjust to life's events.
Insurance, a versatile financial tool.
Let's look at the benefits that Insurance products can contribute to your financial portfolio.
An expansive list of 12 Insurance strategies:
Diversifying your financial future with conservative Insurance Products that are not highly impacted by the swings of the markets:
Participating Whole Life Insurance and
Guaranteed Income Annuities (Qualified and Non-Qualified).
Creating a more balance portfolio with Guaranteed Income Annuities:
predictable and guaranteed income streams that you can depend on to help strengthen your Retirement Income Plan
Taking control and becoming your own banker with a Participating Whole Life Insurance Policy:
having low cost policy loans available for:
unexpected expenses that weren't budgeted
smoothing out monthly income when you are dependent on commissions or a year-end bonus
a short term illness that prevents you from working
a business venture and/or
taking the edge off paying your present mortgage when you've signed a contract on your next dream
You determine when your loans are paid back; not relying on using credit cards or bank loans that incur payment schedules and high interest rates!
If you believe income tax rates will be higher in the future:
funds growing tax free in a Participating Whole Life Insurance Policy can double as a savings account, but without the worry about what future tax rates will be
Taking advantage of your kids' young ages and low premiums to create cash flow streams with Participating Whole Life Insurance, that will continue to grow tax free and be available as low cost policy loans when they:
purchase their first home or car
don’t want to liquidate their hard earned assets during unexpected market swings, giving their assets time to recover and/or
need initial funding that can help them get their first venture off the ground
Let them determine when their loans are paid back; not relying on using credit cards or bank loans that incur payment schedules and high interest rates!
Having access to the Cash Value of Life Insurance can help preserve your child's eligibility for financial aid under the Federal method of calculating a family's expected contribution.
If your health prognosis gives you a year to live - having Term or Participating Whole Life Insurance may have a provision where you can access additional cash for life saving health treatment your health insurance may not provide.
Planning for the unexpected: Individual Disability Income Insurance is a personal protection solution that may help replace a portion of your income.
Planning for your retirement and liking the features of a Roth IRA:
now having a similar option making larger contributions with Whole Life Insurance products that grow tax free
The IRS RMD (required minimum distribution) is the amount that must be withdrawn - per the IRS - from a person’s retirement account balance each year starting when they turn 72 years old:
allocating those assets into a Qualified Longevity Annuity Contract (QLAC)
owners can choose to delay distributions up to the maximum age of 85
(Contributions to a QLAC are limited to the lesser of $135,000 or 25% of your qualified account balance for life.)
Minimizing Estate Taxes your beneficiaries will pay ...
having assets bypass probate at death with Whole Life Insurance
Taking advantage of Insurance Products that generate cash flows that can be used for Long-Term Care needs:
Long-Term Care Insurance (LTCi)
Hybrid Long-Term Care Insurance
Policy Loans from your Participating Whole Life Insurance
Select Insurance Products that support the lifestyle you choose to live:
while giving you the piece of mind that you can plan and re-plan the type of legacy you leave to your loved ones.
What Financial Risks do you want to reduce?
How can different Insurance Products make an impact and help you better manage your financial risks?
Take a look at the financial plan you currently have put in place.
Can you make it stronger by supporting some of your financial strategies with Insurance?
Let's better manage your financial risk.
Debra K. Bedell
Insurance - a great Hedge against Risk.