Life Insurance Offers Clients Protection In Tough Times

By Ralph Dittrich

When we think of life insurance, often the first thing that comes to mind is protection. That protection extends to both good and bad markets – and not just death benefits, but living benefits, too. Given the recent headlines, here are some talking points you can share with clients.

• Guaranteed income-tax-free death benefits can protect clients’ income and assets from market volatility during their working years and beyond, and provide a potential legacy when markets recover.
• Income tax-free withdrawals and loans may be used as a potential source of emergency funds, or to help meet liquidity needs.
• Life insurance cash values can be accessed during a down market to avoid selling other assets and “locking in” losses.

Additionally, clients have life insurance product options that not only address immediate needs but provide peace of mind during difficult times.

• Indexed universal life can participate in the market’s upside potential up to the cap rate, and its zero percent floor can limit downside risk.
• Many IUL products offer blended and low-volatility index options that may help avoid losses or high par index options, which may perform better during a recovery.
• Withdrawals and loans from an IUL policy following a down market avoid “locking in”losses, and allow traditional retirement funds time to recover.
• Many variable universal life products offer long-term guarantees that help reduce the impact of short-term market volatility.
• A well-diversified VUL asset allocation may provide opportunities to “buy on the dip.”
• Participating whole life may provide steady, predictable cash value accumulation with low-risk correlation to other assets.
• A perm/term combo can also offer both temporary and affordable long-term protection.

In the face of these uncertain times, a lot of clients are getting their financial houses in order and exploring their options when it comes to protecting their families and loved ones. Unfortunately, it often takes these unforeseen circumstances to get people to plan for the future, but as financial professionals, it's our obligation to talk about these topics in good times and bad times.

Ralph Dittrich, CLU, ChFC, is vice president, life product management, Crump Insurance Services. Ralph may be contacted at [email protected].

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