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Capital Preservation

Transfer Market Risk, Guarantee Outcomes, and Reduce Taxes

High net worth families seek to achieve their multi-generational financial objectives with a variety of investment and estate planning strategies. Capital preservation is a foundational element of their financial plans as they are cognizant of the inherent risk in private and public markets.  Guaranteed life insurance provides capital certainty at compelling rates of return, while market and interest rate risks are transferred to the insurance company.  


  • Life Insurance as an Asset Class

  • Defined Outcome Structures

  • Life Settlement

  • Annuity Life Arbitrage

  • Portfolio Optimization

Life Insurance as an Asset Class

Proper asset allocation is vital to long term returns.  Incorporating life insurance as an asset class can be a valuable tool in optimizing the risk/reward profile of an investment portfolio, as well as also complementing other financial strategies. 


Ultimately, the needs of the client will determine the final composition of a life insurance portfolio and certain benefits will be emphasized more than others.


Suitable for a wide range of clients, especially appropriate in HNW situations where insurance may be used as a hedge against certain financial planning risks.  This concept is particularly suitable for clients with existing trusts who desire to maximize the value of trust assets without taking on more investment risk.

Defined Outcome Structures

To offset potential equity drawdowns, investors typically own bonds and cash equivalent securities. 


A Defined Outcome Structure, or Buffer Annuity, allows the client to secure guaranteed levels of protection against market losses while still providing the opportunity to capture significant market returns. 


The client chooses a duration period, the protection level and a corresponding participation rate in potential market gains.


This strategy is for clients seeking to diversify their allocation with a differentiated asset.

Life Settlement

Life insurance has a market value like other assets. 


As insurance needs change, clients may garner value from the sale of a policy to institutional buyers in the secondary life insurance marketplace.  This marketplace has grown significantly in the last 10 years, generating billions of dollars for policy owners.


Generally limited to insureds with life expectancy of less than 10 to 15 years.

Annuity Life Arbitrage

This approach allocates estate included assets to a guaranteed immediate annuity and uses a portion of the annuity cash flow to purchase a life insurance policy outside the taxable estate. 


The concept may be enhanced by underwriting results and can increase the spendable cash flow from fixed income assets while maintaining – and in some cases increasing – the net amount to heirs.


This strategy is appropriate for individuals who are age 65 to 85, in fair to good health, who desire higher, or guaranteed, cash flow.

Portfolio Optimization

Just as an investment manager might broadly separate asset classes into stocks, bonds, real estate and alternatives in determining the optimal allocation for each client, a similar discussion should occur when clients consider their insurance needs.


Life insurance products emulate the investment world—from very conservative with complete guarantees (Guaranteed Universal Life) to those that are exposed to market volatility and potential upside (Variable Universal Life).     


An insurance portfolio can be optimized by incorporating customized solutions using a mix of different life insurance products to accomplish different goals relating to risk, taxes and wealth transfer.


Clients who do not want all their eggs in one basket.  Most clients have needs that are multi-faceted and insurance anchored solutions should reflect that diversity.

Reduce the Impact of Income Taxes.

Transfer Market Risk, Guarantee Outcomes, and Reduce Taxes.

Maximize Funds Transferred to Family or Charity.

Tax Advantaged Structures to Maximize Retirement Income.

Retain and Incentivize Key Employees to Protect the Future.

A Powerful and Tax-efficient strategy to Fund Large Life Insurance Premiums.

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