10 Reasons Why Life Insurance is a Viable Asset Class

October 18, 2022   |   Life Insurance

Portfolios, regardless of the size, should be as diversified as possible, right? ?Well, whereas most portfolios include real estate, stocks and bonds; life insurance is often overlooked.?Now, with solid internal rate of return (IRR, for short, think rate of return) mathematics, you can add the tax-free asset of life insurance to the mix as well.? 

Life insurance can solve a TON of financial headaches for you, your family, and your business including: 

  • Replacing your income should you pass 
  • Using to pay off debts (Ex. Mortgage) 
  • Pension maximization, supporting business continuity; 
  • Replacing the value of key assets; 
  • Easing the pain of auto and homeowners’ insurance premiums; 
  • Covering college costs; 
  • Providing collateral for loans (Ex. Bank SBA loans for your business) and supporting payment obligations (Ex. Divorce decrees); 
  • Inheritance equalization; 
  • Final expenses; and
  • Funding potential extended care or terminal illness situations. 

10 Reasons Why Life Insurance Is An Attractive Asset Class 

  1. Superior, Safe Results – The average life expectancy (84-87) typically provides a tax-free IRR (Think rate of return) of 6% to 8%, which would require an equivalent yield of 9.23% to 12.31% in a taxable investment (Remember life insurance typically pays out tax-free!) just to compete. 
  2. Predictable Value – No other asset comes with a lifetime annual internal rate of return (IRR) illustration. Just make sure you have a trustworthy agent, like Insuring Income, design these for you! 
  3. It Ensures Your Legacy to Heirs – 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 taxes, transfer cost or fees.  
  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.  
  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 financial security, many investors become more comfortable taking added investment risks with other assets.? 

Reach out to us today to learn more about life insurance and get one step closer to protecting your family! Ready to take the next step? Click here to get a quote from our Life Insurance partners, Insuring Income! 

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