A Fresh New Look At The Investment Merits Of Life Insurance...Back To The Future
Speakers: Robert Stuchiner
Life Insurance is a "Risk Shifting" proposition. All too often, insurance professionals have overlooked the risk shifting attributes and have, instead, focused on tax advantages and higher portfolio yields relative to other investments. This talk proposes that our basic value proposition of risk shifting is the lens through which we should examine the investment merits of owning life insurance. The Net Amount at Risk (NAR) of a life insurance policy is a non-correlated asset. Mortality is totally unrelated to the rise and fall of capital markets. The introduction of NAR into a diversified investment portfolio reduces volatility and can improve risk adjusted returns. Insurance carriers bear the risk of market value fluctuations in their general account. They must provide immediate liquidity for cash values and death benefits despite the potential for adverse changes in market value of underlying investments. Further, insurance carriers bear the credit risk and in essence, upgrade the credit quality of the investments they make reflecting their credit rating. Insurance carriers are uniquely situated to absorb these "risk shifts" unlike any other institutional money manager. This talk will focus on non-correlation of NAR, immunity from market value fluctuations and guarantees as often overlooked, yet perhaps the most valuable, investment attributes of owning life insurance.