Anyone With an Income or Wealth Should Own Life Insurance
Anyone With an Income or Wealth Should Own Life Insurance
February 25, 2020

I just cringe whenever I hear the following from any financial advisor about life insurance:

  • “I do complete financial planning for my clients, but I rarely sell life insurance.”
  • “When I see the need for life insurance, I offer it to my clients.”
  • “My clients already have life insurance, or they don’t need it.”
  • “I don’t have a life insurance license, but when a client needs it, I refer them to an agent.”
  • “I don’t sell life insurance anymore.”

What these statements mean to me:

  • The financial advisor is unwilling to take the time and effort required to incorporate life insurance products into their clients’ portfolios.
  • The financial advisor is poorly educated on the incredible benefits and features available with modern life insurance products.
  • The financial advisor has a preconceived notion that life insurance is not an attractive asset class (again, this is due to a lack of education).
  • The financial advisor is only focused on gross returns versus net returns (net returns = after taxes and management fees).
  • The financial advisor is solely focused on maximizing fees and getting assets under management (AUM).

The bottom line is this: every successful person should own life insurance because virtually every successful person deals with at least one of the issues below.

Death Benefit Needs
  • Income replacement
  • Spouse, children, grandchildren, or parents who are dependent on you
  • Debt payoff (mortgages, business loans)
  • Business continuation (like a buy-sell agreement)
  • Key person coverage
  • Estate equalization
  • Pension maximization
  • Estate taxes
  • Divorces
  • You want to leave a legacy.
Living Needs
  • Long-term care protection (hybrid life insurance policy)
    • The odds of needing long-term care are over 70 percent, yet most people don’t have insurance to cover this.
    • Why sell assets, pay taxes, and then pay for your long-term care needs when you can get this protection for just pennies on the dollar?
  • Executive benefits and golden handcuffs
  • Alternative asset class or supplemental retirement plan
    • Tax diversification
    • Liquidity
    • Tax-free growth and tax-free income
    • Access to tax-free money prior to age 59 1/2
    • Manage portfolio risk
    • Non-correlated asset class with great internal rates of return (IRR)
    • Absolutely no contribution limits

Think about it this way: how many Super Bowl championships would you in if you had the #1 ranked offense but the last place defense in the league? I’m thinking none. Owning a good life insurance portfolio, that’s the same as having a top-ranked defense.