In today’s ever changing world certainty is extremely important. When it comes to portfolio diversification, certainty is even more important. Notice I did not say guaranteed, even though what I will be talking about today is a guaranty strategy, we are looking more for certainty with investments and portfolio diversification. I have talked about in previous articles and I will discuss in future articles life insurance as an asset class. Dick Weber did the research on this showing how in a randomized experiment at a max funding of a 40 year old male preferred non tobacco at 5.15% only 97% of the time did an Indexed Universal life last over age 100. Many people in the insurance industry state that a permanent plan is there to help protect against not knowing when one is going to die. That is why I take Life Insurance as An Asset class to a higher plane and feel it can be used in many situations and utilizing an indexed universal life policy along with a whole life or guaranteed universal life, if you are only looking for death benefit, along with term is a good diversification of the insurance solution.
Today I want to go a little further. In today’s environment, investors are often looking for certainty from their investments, but by doing so they give up something, whether it be liquidity, return or tax treatment. What if I could show you a strategy that may not be completely liquid today but has certain returns and could be a replacement to a bond or unused cash portfolio? This is where the 10 pay strategy comes into play. There are two companies, open to the independent world, which do this strategy really well. There are multiple ways this can be done, through an immediate annuity paying premiums, a premium deposit account, or manually, all the ways you are using a 10 pay life policy, and the premiums are amortized out over 10 years. You earn money on the lump sum and in the cash value of the policy. You also start getting certain returns based on dividend scales and it develops into a larger opportunity for you. The money is also liquid, although you forfeit interest return in the PPIA, the SPIA is more locked but you are getting a set return as well. Both strategies work it just depends on what you and your client want to accomplish.
To learn more check out the podcast page at www.solveurpuzzles.com, or give me a call at 512-428-4145 to discuss.