It would be incredibly awesome if Impact came out with a customizable module for “Life Insurance as an Asset Class.” Our company would subscribe to it in a heartbeat and include it in our wealth planning suite.

My only feedback on the article is that I wouldn’t refer to the area after the crossover point as the “insurance loss at death” because the clients are not necessarily losing anything. The death benefit provides a meaningful benefit in all years and doesn’t go backwards or “expire worthless.”

Also, the assumption is that the “investment” strategy gets a consistent rate of return every single year. Obviously this is not reality if there is any exposure to equities in the portfolio and so the death benefit, because of it’s predictable nature and the fact that it’s not correlated to other common sectors of the marketplace, can help “hedge” against future fluctuations and volatility in the transfer of wealth during the “post-crossover” years. The key word with the investment strategy is “hypothetical” whereas the death benefit is predictable and defined!

The IRR will typically still look decent on a pre-tax equivalent basis in post crossover years as well and if you compare the difference in IRRs between the death benefit and the investment during these years, the difference may not be all that dramatic compared to the considerable enhancement and leverage that the death benefit provides in the earlier years. This is especially true when comparing the IRR on the entire portfolio or estate.

Additionally, whenever you introduce a non-correlated asset into the plan, overall beta and risk may be reduced which has an intangible value and helps make up for some of the “loss” by possibly providing a better risk-adjusted return in the portfolio or estate at death.

Great article though! Please look into creating an illustratable module if possible.

Thanks! Keep the good stuff like this coming!