Considering the extreme
volatility we’ve witnessed for the past several weeks, it may be appropriate to
add a new asset class. This could be a
perfect tie-in for accumulating cash, reducing volatility and planning for your
Business Succession.
The new asset class is Whole
Life Insurance. At first it may sound
strange to include Life Insurance when we discuss stock market
investments. But let’s take a quick peek
at some of the benefits.
To begin with, many of the
whole life companies we broker are currently offering very competitive dividend
rates of between 6% – 7%. This is of
course after the cost of Insurance is deducted from your
investment. This could be a significant
factor in view of the stock market volatility which has the S & P 500 down
for the year to a tune of -5.24%. In
addition, the dividend is tax-free. You’d
have to average a TAXABLE return of 9.25% to equal the tax-free dividend of
@7%!
Moreover, you have the
death benefit which is also received tax-free.
The death benefit can be used to buy-out another partner’s
interest. There are a few other added
benefits to consider. The dividend, of
course are not guaranteed to pay the same interest every year. Thus, in future years it could be higher
and/or lower than its’ current rate.
However, when declared it is considered a FIXED investments. This mean it is not subject to the ups and
downs of the stock and bond market fluctuations.
While this plan is not for
everyone, it is worth given some adequate consideration.