Traditional Life Insurance

The balance sheets of most ultra-affluent families are comprised of complex assets with varying levels of liquidity. Additionally, most wealth accumulation and wealth transfer strategies require time to mature. As a result, market volatility and changing financial circumstances can have a material impact on wealth creation and preservation.

Traditional life insurance product portfolios can produce attractive, income-tax-free IRRs and provide immediate liquidity to the policyowner at the death of the insured(s). A well-constructed life insurance portfolio can help reduce the volatility of a family's net worth, while providing an important liquidity hedge for wealth transfer strategies that take time to mature,

 

and help to prevent the forced sale of assets that might otherwise be required to fund estate tax liabilities at the death of an insured. Large block life insurance coverage can also play a critical role in business continuity.  As a company’s success often relies on a small group of its employees, losing the services of a member of the executive team or a crucial staff member with specialized skills can jeopardize the continuity of the business.  These essential individuals are often referred to as “key persons.”  Key person insurance can help offset sudden catastrophic revenue loss, finance the recruiting and training of a replacement, and is a low-cost risk mitigation strategy that can provide assurance of sustainability and succession planning.

Our clients generally use life insurance to achieve one or more of the following objectives:

Create liquidity at the time estate taxes are due to avoid the forced sale of assets
 
Hedge other estate planning strategies that require time to be fully realized
 
Fund specific inheritances to heirs or charitable bequests
 
Establish a guaranteed, fixed-income investment within a family's intergenerational asset allocation
 
Protect a business against the sudden catastrophic loss of a key person
Learn about Private Placement Accounts