A collection of insightful and informative articles from Myerson Wealth's “Recipes for Success” newsletter
Have you ever been to a chili cook-off? Perhaps you’ve even participated in one. I’ve participated in many, none of them professionally, but that never prevented me from engineering my very best recipe. I’ve done traditional ground beef, braised chuck, chicken, vegetarian, and more. I’ve done hot, mild, sweet, with beans and no beans, and to this day, I’ve never won a single contest.
Very fortunately, my passion for cooking does not require me to win for a living. However, winning is an essential component of my professional practice, and interestingly enough, involves cook-offs of a completely different kind…
Life insurance is most commonly thought of as a protection tool, and for the most part, is used for this purpose. However, there are a number of more sophisticated uses of life insurance that, if properly engineered, transform this otherwise “one dimensional” humble workhorse into an exceptional retirement accumulation vehicle, second to no other.
Let’s consider the use of life insurance to provide living (retirement) benefits through the cash value component of the policy. Notwithstanding the cost and expenses (including commissions and mortality charges) inherent in cash value life insurance, the impact of tax-deferred growth, and ultimately structured tax-free withdrawals, makes life insurance, over the long-term, the safest and most efficient way to grow cash for retirement.
Here’s the problem, though. Many purveyors of cash-value life insurance want you to believe that permanent life insurance can deliver a combination of cash value accumulation AND income protection. This is one of the reasons most of the folks selling whole-life coverage lose in any “cook-off.” They will build you a life insurance portfolio consistent with both your protection needs (hopefully) and your budget, and sell you on the fact that you now have the best of both worlds. In the satirical words of Alec Baldwin in his Saturday Night Life guest role, “Wrong!” What you have is neither the best plan for protection, nor the best plan for asset accumulation. Using the exact same dollars and reallocating them using our system, Life Insurance—Intelligently Engineered®, we can increase the efficiency by reducing costs, expenses, mortality charges, and especially commissions. A very winning recipe!
And then there’s the actual investment component of the cash value. How does your money generate returns? Are you using a bond-based whole-life structure, or a more robust (but no more risky) equity indexed-based structure? While we have the recipe from the very best chefs in the world for the whole-life product, our clients tell us over and over again that our indexed-based recipe is the winner by far.
While I’m yet to win a chili cook-off, we’ve not yet lost a battle in the more important arena of life.
And as always: Eat Well, Drink Well, Live Well!