Our investment portfolios have shrunk significantly in 2022, and for many of us our confidence in financial markets remains uncertain. We know that “markets” have proven their worth in the past, providing us with a stable way to invest systematically with the certainty that our wealth will grow over time.
Hopefully we will also reallocate our investments to reflect our risk tolerance and liquidity needs as we age and as we consider retirement.
There seems to be interest again securityin products like pensions and insurance, things that offer guarantees for families and retirement incomes, especially if markets do not return to some degree of stability. Investors have reverted to annuities and T-bills for certain investment returns, and have traded volatility for certainty – strategies not seen since the 2008 financial crisis. In short, people want to sleep at night!
Interest in life insurance has also suddenly skyrocketed as people understand that reducing their wealth means less wealth for heirs if they die prematurely.
Makes sense…with all the news reporting war, global and weather-related disasters, shootings and random killings, escalating crime, and even with the era of COVID possibly in our rear-view mirrors, we’ve all suddenly been confronted with events that let’s face ours face mortality. As Jim Morrison said, “No one gets out of here alive.”
When was the last time you actually reviewed and considered the economic needs of your family or business if you die tomorrow? What plans would you want to have if the way you bought life insurance changed tomorrow?
Most people buy term life insurance, “set it and forget it”. Maybe a million dollars isn’t what it was years ago. It certainly doesn’t last as long as it used to. In fact, I will argue that most of us are underinsured. By a lot.
There are assets and then there is liquidity. Life insurance brings liquidity to situations at just the right time. It brings money to families who have a lot of wealth but no liquidity. Most people buy term life insurance, but the problem with term life insurance is that it most likely expires well before you do. Policies will not be updated or refinanced. Then WHAM, you’re too old to re-qualify. Or it’s too expensive.
If you haven’t reviewed your life insurance policies in the last few years, this is the time. Term life insurance rates are at an all-time low. Then there are the new types of term policies that can “come to life” and pay for things like long-term care if you need money while you’re alive. Your current policy probably doesn’t do this.
Life insurance can be a tool to transfer wealth, preserve assets, and ensure that special events — like marriages, home purchases, retirements, and grandchildren — preserve something special and create legacies. With life insurance costs currently low and insurers chasing year-end revenue, this is an extremely good time to re-examine your life insurance portfolio.
People who plan are always more successful than those who don’t plan. What’s your plan?
Martin Levy, CLU/RHU is the founder of Corporate Strategies Inc. (CorpStrat) based in Woodland Hills, California. A 30-year insurance industry veteran and a lifelong member of the Million Dollar Round Table, Levy is an expert on long-term care planning strategies. You can reach him at (818) 468-0862 or [email protected]
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