BSMG Blog: Protecting the Future of Families and Businesses

10 Reasons Why Life Insurance is a Viable Asset Class

Posted by BSMG on 13 Jan 2016

Life insurance is a powerful asset that demands a place in your client’s financial portfolio due to its unique risk and return characteristics. 
Did you know that the underlying mathematical principles dictate that life insurance is the highest returning, safest asset a client can own?


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 IRR mathematics, you can add the tax-free asset of life insurance to the mix as well. 

Life insurance is capable of solving a plethora of financial headaches for clients including:

  • 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 and supporting payment obligations;
  • Inheritance equalization;
  • Final expenses and debts; 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 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 Client's 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 clients portfolio with life insurance, but have concerns regarding their insurability, learn how to play an active role in the underwriting process as a field underwriter.

Topics: Life Insurance