If it’s too good to be true, it usually is!
Over the fourth quarter, we want to share real “it’s too good to be true” case studies with this Fiscal Harmony™ community. Many of these stories have a genesis in market volatility moments…just like now. This month, we are addressing life insurance as an investment. Our goal is to make you wiser investors, even if you never choose to work with us.
Life Insurance – Is It a Good Investment Alternative?
Life insurance is absolutely necessary if loved ones are dependent on your income. It is part of the Fiscal HarmonyTM process to build insurance strategies to meet current as well as potential future needs as a family’s net worth grows. We base these strategies on economic needs, while using the best solution with the lowest cost. When markets get volatile, insurance products can oftentimes be framed as a panacea investment alternative, and marketing of insurance products increases. Before investing in more insurance, there are a few things to consider.
We’ve had numerous clients with life insurance marketed as an “investment” vs. insurance that provides for their loved ones if something dreadful were to happen. In more than one case, clients took a loan against cash values because the product was marketed as a great tool to do so. At closer inspection in one of these cases, the policy paid a 2% dividend yearly for approximately 10 years but the loan payment charged interest at 4.75%. In short, the costs for the loan exceeded the interest earned. Market volatility could have made it difficult for the investor to access needed funds as well; however, a financial plan could have yielded additional options to consider. For young investors, the loss of buying power due to inflation can present risks to their overall investment plan as well.
If you are presented with an insurance solution, a good rule of thumb is to ask the following:
- What are all the underlying costs in the policy?
- How does the insurance derive income to pay dividends?
- How does the agent writing the policy get paid, and what is their percentage?
Better yet, seek the advice of a CFP® advisor who can help navigate insurance options to meet your families current and future needs.
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Orchestrating Fiscal Harmony™,
Kelly Kunst CFP®
Founder
2022 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Over 4,000 Dallas-Fort Worth wealth managers were considered for the award; eight percent of these candidates were named 2022 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.
Investing in real estate involves special risk, including possible declines in real estate values, adverse economic conditions, and changes in interest rates and may not suitable for all investors.
Securities offered through Berthel Fisher & Company Financial Services, Inc. (BFCFS). Member FINRA/SIPC. Please note electronic mail is not secure: BFCFS does not accept or take responsibility for acting on time-sensitive instructions sent by email. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
Orchestrating Fiscal Harmony™,
Kelly Kunst CFP®
Founder
2021 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Nearly 4,000 Dallas-Fort Worth wealth managers were considered for the award; ten percent of these candidates were named 2021 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.
Securities offered through Berthel Fisher & Company Financial Services, Inc. (BFCFS). Member FINRA/SIPC. Please note electronic mail is not secure: BFCFS does not accept or take responsibility for acting on time-sensitive instructions sent by email. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.