A. Portfolios, regardless of the size, should be as diversified as possible. While most portfolios have real estate, stocks, and bonds, cash life insurance is often overlooked. If you believe in IRR mathematics, you should add the tax-free asset of life insurance to the mix as well.
Below are 10 reasons why life insurance is an attractive asset class and should be an part of your portfolio:
1. Superior, Safe Results
The average. life expectancy (84-87) typically provides a tax-free IRR of 6% to 8%, which would require an equivalent yield of 9.23% to 12.31% in a taxable investment just to compete.
2. Predictable Value
No other asset comes with a lifetime annual internal rate of return (IRR) illustration.
3. It Ensures Your Legacy
A policy can be set up to pay a known death benefit amount at the time of the insured’s death.
4. Value Not Directly Linked to Market Performance
A life insurance policy can be designed in such a manner that the death benefit may not directly depend on market performance.
5. Liquidity
The life insurance policy is easily converted into cash at death and is not reduced by commissions, taxes, transfer cost or fees. In addition, your client has access to their policy cash surrender value at all times.
6. Growth / Leverage
The death benefit amount is likely to exceed the costs of acquiring and maintaining it. Premiums paid for death benefit protection may provide a competitive rate of return through life expectancy.
7. Income Tax Free Features
Asset growth is income tax free when distributed at death. When established properly, life insurance can be purchased inside your pension plan with tax-free dollars.
8. May Avoid Estate Taxes
Life insurance is frequently purchased to avoid estate taxes. No other asset offers this immediate estate tax advantage.
9. Avoids Probate
Forget about the costs and delays associated with passing assets through probate; life insurance be immediately delivered to beneficiaries without any financial burden.
10. Versatility
By leveraging life insurance to shore up their financial security, many investors become more comfortable taking added investment risks with other assets.
If you are ready to diversify your portfolio with life insurance, please contact us so we can work together to find out the best product for you.