5 good reasons why whole life can be good for your portfolio.

Sure, whole life can help protect your family--but a recent study found it can do more.

Whole life insurance is a powerful financial tool with a wealth of benefits for you and the important people in your life. But as a third party study recently concluded, it can be good for your portfolio as well. Here are five reasons why you—and so many others—may want to add a healthy dose of whole life insurance to your financial portfolio. 

  1. Protect your family—and their future.

    First and foremost, whole life insurance is about protecting the people who rely on you. It offers death benefit protection that can help replace your income and keep your family going in case you pass away.  What’s more, whole life insurance is an effective way to leverage your money. After all, how else could you give them $250,000 in protection, for just $261.02 down each month? 1
  2. Pursue competitive returns and less risk.

    You worked hard to build up a portfolio—so the last thing you want is to put it at risk. A whole life policy can help with that—as a Morningstar Investment Management study recently found. The study, which was commissioned by New York Life, found that by replacing just 20% of a portfolio’s traditional fixed income investments (bonds or bond funds) with whole life insurance, you may be able to produce similar returns with potentially much less interest rate risk. 2,3
  3. Replace your human capital.

    Chances are you still have a lot of money to earn. And your portfolio growth is highly dependent on future contributions. But where will that money come from if you are no longer around? Whole life insurance is a cost-effective way to replace your “human capital” which consists of wages, benefits, social security, and any other unrealized forms of compensation you would have received as a result of your labor. 
  4. Safeguard your retirement assets.

    Since whole life policies are guaranteed to build cash value over time, you have a valuable resource that can help you pay for big-ticket items like a new home or business. But you can also use this same pool of money to protect your retirement assets and supplement your income during down markets. Instead of selling off portions of your portfolio when prices are depressed, you can use your policy’s cash value as a stop-gap measure until your other assets have time to recover. 5
  5. "Reinvest" your dividends.

    One of the benefits of purchasing whole life coverage from a mutual company is the fact that you will be eligible to receive dividends. While not guaranteed, New York Life has awarded dividends for 163 consecutive years so our policy owners are used to enjoying the extra value they provide. You can take your dividends in cash, use them to pay future premiums, or—much like stock dividends—use them to purchase additional coverage (paid-up additions) which in turn, gives you more death benefit protection, more cash value, and more dividend earning potential year after year. 

As you can see, there are a host of reasons why you should add whole life insurance to your portfolio. Talk to your New York Life agent today. 

New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC15216-50P

 

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Further Reading

1. The premium quoted is for a 35-year old male, rated select-preferred, paying monthly Check-O-Matic premiums on a Whole Life (AD 116) policy with a $250,000 face amount. Your premiums may differ.

2. Results were based on an evaluation of the realized dividends and cash surrender values of a Whole Life policy issued 1/1/82—12/31/16 (35-year old male, $250,000 face amount, select preferred rating, annual premium of $3,585) and the historical results of the S&P 500 and Bloomberg Barclays US Aggregate Bond Index. The indexes are unmanaged broad-based indicators of the US stock and bond markets. Past results of the policy and the indexes are no indication of future results. Index results do not account for taxes or investment management fees.

3. The Morningstar study assumes the hypothetical owner remains in the policy for 35 years and pays all premiums. It assumes that no withdrawals or loans have been made during the period since policy owner actions can affect the results of a life insurance policy significantly. The results are based on past dividend history, but it’s important to know that future dividend payout rates cannot be predicted. Also, it's unlikely that New York Life will continue to have the same investment results on the assets supporting its policy obligations, or the same mortality rates and expenses, so the results in this research offer no assurances about the future.

4. Guarantees are based on the claims-paying ability of the issuer.

5. Cash value can be accessed through loans and partial surrenders which accrue interest and, if not paid back, will reduce the policy’s death benefit and cash value.