Using Life Insurance to Diversify Your Portfolio

If you have maxed out all your tax deferred growth options you can diversify your portfolio using life insurance.  Life insurance can allow individuals to gain the advantage of tax deferred growth inside cash value accounts. If funded correctly these cash value accounts can grow and be withdrawn as tax free income in your retirement years.  Some advisers even refer to this strategy as a Super Roth.

Throughout the years, as financial planning has become more comprehensive, both consumers and advisers have become aware that planning for retirement requires numerous components. The big question is – are you leaving anything out?

How to Balance Your Portfolio Using “Overlooked” Financial Tools

Today, given our much longer life expectancies, it’s no longer enough to implement financial plans that are based solely on income accumulation. Rather, it has become essential to also incorporate the protection of assets from more increased market volatility, as well as to ensure that funds are properly transferred when the time comes.

What many investors may not realize is that life insurance can be used as a very effective tool when it comes to diversification. Although the key purpose of life insurance has always been its death benefit as a source of debt payoff and replacement of income, this financial vehicle is also being used more and more as a way for individuals and families to both reduce risk and to protect wealth from market volatility, taxes, and even our longer life spans.

In fact today, there are even certain types of life insurance plans that have an investment component that can help the policy holder to supplement retirement income on a tax free basis with cash value accounts.

Life Insurance Can Provide Financial Structure

In many ways, life insurance can also provide financial structure to a portfolio. How so? One reason for this is its predictability.

Due to the tax free death benefit protection that it offers, life insurance can help investors to secure financial protection – which can essentially help its holders in meeting their goals at any stage in life, including the payment of a child’s college tuition, the payoff of a mortgage, the boosting of retirement savings, and / or the protection of wealth for future generations.

How to Diversify Your Portfolio using Life Insurance

Cash value life insurance grows tax deferred.   Index cash value products can offer savvy investors chances at double digit gains without the chance of losing a single penny of principal.  You can track major indexes like the S&P, Russell, Gold and other indexes in these types of products.  The accumulated cash value can withdrawn in retirement years income tax free and help supplement your your retirement income without raising your tax bracket.  You can learn more about this index life insurance strategy here.

Which Type of Life Insurance is Right for You?

Life insurance can make a substantial difference in how an investor allocates funds in terms of reducing risks that are associated with other areas of a portfolio. It can also help in reducing tax liability, as well as increasing overall wealth.

With this in mind, life insurance should not be considered as just a stand-alone product, but rather as a complimentary tool that works in conjunction with the entire portfolio in order to strengthen, protect, and diversify.

To get a better idea of how life insurance can work to strengthen your overall financial plan, contact us. We work with more than 40 life insurance carriers – and we can help you to find the policy that fits in with your specific needs and goals.