Whole Life as a Unique Planning Tool

By Jason Oshins, Financial Advisor, MBA | Volume 2, Issue 1 (January 2014)

Given the financial condition of many families today, we’d be remiss not to explore whether more powerful retirement strategies exist than the ones typically employed.

The traditional retirement strategy involves funding various financial vehicles during working years and then living off the income generated by these assets during retirement.  As a result, each year retirees spend only the interest earned on their assets because they fear running out of money or preserving adequate legacy.  At some point, they either sacrifice principal to maintain lifestyle or sacrifice lifestyle to maintain principal.  Either way, they must compromise.  Furthermore, this fear of running out of money or preserving adequate legacy prevents them from truly enjoying their wealth.

Given its guarantees1, whole life insurance has an opportunity to play a prominent role in retirement planning.  Historically, it has provided a death benefit for premature death while being positioned as a tax-deferred cash accumulation vehicle during working years (albeit one with guaranteed cash accumulation and a guaranteed death benefit) and as a tax-advantaged2 income during retirement years.  Each year, the policy owner distributes a portion of the policy’s accumulated cash to supplement retirement income3,4.  While this improves the clients’ existence, it doesn’t optimize their opportunities.  Most importantly, it doesn’t address their fear of running out of money or preserving adequate legacy.  Whole life has the ability to serve as a much-needed anchor, stabilizing the overall estate in times of economic uncertainty and market volatility.  Strategically, it has the ability to do so much more.

Let’s explore a different, more powerful approach to positioning whole life insurance.  By capitalizing on its guarantees, we can plan around an event certain to occur in the future.  Instead of using the insurance as a retirement supplement, we can use it as a wealth replacement mechanism.  This can enable clients to access and enjoy far more of their wealth – both interest and principal – with far less fear and anxiety.  For example, if our clients know that an amount equal to the wealth they’ve accumulated for retirement is waiting on the sidelines, they now have the ability to deplete their wealth over, say, a 20- or 25-year period.

As such, instead of drawing cash from the insurance as a supplement, the strategy involves setting the insurance on the sideline for now, allowing it to continue its accelerated growth4 along the compound interest curve, positioning it as a complementary asset.  Then, when the insured dies, the guaranteed death benefit serves to replace the consumed assets.  In the event the retirees exhaust their other assets, they can access the tax-advantaged cash available inside their policy.

To recap, when retirees have no insurance, they are limited to living off the interest generated by their assets, unless they elect to invade the principal.  When insurance is included in the planning, often it’s used to supplement income during retirement.  The more powerful application positions the insurance on the sideline, enabling the retirees to enjoy their assets, using insurance as a replacement mechanism for the consumption of assets.

When I explain the concept and demonstrate the strategy, clients invariably express greater comfort in accessing and enjoying their wealth knowing they have a no-matter-what replacement.  Positioning insurance as a strategic complement rather than a subsidy will result in significantly greater financial and psychological wealth.

[1] All whole life insurance guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.
[2] The Guardian Life Insurance Company of America (Guardian), New York, NY, its subsidiaries, agents or employees do not give tax or legal advice.  You should consult your tax or legal advisor regarding your individual situation.
[3] Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals.  Dividends, if any, are affected by policy loans and loan interest.  Withdrawals above the cost basis may result in taxable ordinary income.  If the policy lapses, or is surrendered, any loans considered gain in the policy may be subject to ordinary income taxes.  If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes.  If the policy owner is under 59 1/2 any taxable withdrawal is also subject to a 10% tax penalty.
[4] Dividends are not guaranteed.  They are declared annually by Guardian’s Board of Directors.




Jason Oshins is a Financial Advisor with Wealth Strategies Group.  He works closely with clients throughout the country to increase wealth during lifetime, improve income during retirement, and provide a greater legacy upon passing, while also protecting their estate from taxes, inflation, and market volatility.  He specializes in the areas of estate planning, investments, retirement planning, insurance planning and design, disability protection, long-term care, wealth transfer, and business planning.  Jason obtained his MBA from the University of Michigan in Ann Arbor.  He can be reached at (702) 735-4355 x218 or at jason.oshins@wealthsg.com.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 6455 S. Yosemite Street, Suite 300, Greenwood Village CO  80111, Securities products and services are offered through PAS (303-770-9020). Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY.  PAS is an indirect, wholly owned subsidiary of Guardian.  Wealth Strategies Group is not an affiliate or subsidiary of PAS or Guardian.

PAS is a member FINRA, SIPC

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