
Sales Idea: Help Clients Navigate Market Volatility in Retirement with Permanent Life Insurance
Analysis of “sequence of return risk” shows that withdrawing income early in retirement during a down market can significantly reduce portfolio longevity. Show your clients how a cash value life insurance policy can help protect them from this risk by providing an alternate source of income during down markets.
We want to show you a hypothetical situation below to explain sequence of return risk. This information should not be used to make a financial decision and is provided as education only.
Client Profile
- Male, age 50, Super Preferred NS, married
- All children are “out of the house”
- No mortgage or other significant debt
- Desires approximately $60,000 of annual after-tax income during retirement (not including Social Security benefits)
- Is able to direct $2,500/month to additional savings
Impact of Sequences of Returns
Compare Mr. Smith (retiring in 1969) and Mrs. Jones (retiring in 1971):
- Each start with retirement accounts with $2M
- Each withdraws $100k annually

An Alternative Scenario for Mr. Smith
What if Mr. Smith had been able to avoid taking withdrawals during the years when the market performed negatively (excluding year 1) because he had another tax-advantaged source of income he could access? In that case, he likely would have experienced a much different outcome with respect to the longevity of his account.

Conclusion
Cash value life insurance can help manage the sequence of return risk clients will face during their retirement years. And using an indexed universal life policy can help drive cash value growth at potentially higher crediting rates than a traditional UL policy can, while offering a “floor” that provides downside protection during down markets. What’s more, adding a long-term care rider gives clients additional protection of their primary income assets. In short, cash value life insurance offers a solution that clients may be looking for, now more than ever, to help cover times of financial uncertainty.
Avoiding withdrawals from this account in years when there were negative market returns substantially increases its potential longevity. However, in order to avoid taking taxable withdrawals in this manner, Mr. Smith would likely need another source of income from which to draw. Permanent life insurance can serve as this source of tax-free income.
Although Mr. Smith experienced a slightly higher than average rate of return over a 30-year period, his outcome was much different due to the sequence of those returns. *This is a hypothetical of those returns.
We have a consumer-approved flyer with this sales concept available to insurance professionals. Please contact AIP Marketing Alliance’s Business Development team at (800) 783-5206 Press #2 or marketing@aipma.com.
Disclaimer
Most insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. An insurance professional can provide you with costs and complete details. Guarantees are based on the claims-paying ability of the issuing insurance company. AIP Marketing Alliance is not an insurer and does not issue contracts for coverage. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice.
Latest Posts



Categories
Tags
Legal And General Tickit Tips Foresters Financial Working From Home Leads Fidelity Guaranty Life North American Genworth Webinars Charity Covid19 Annuity Integrity Fixed Indexed Annuity Social Media Myaip Taxes Nationwide Nafa Regional Director Aig Coronavirus Covid 19 Drop Ticket Ira Life_Insurance American Equity Roth Ira Open Enrollment Holiday Financial Planning Term Life Insurance Medicare_Supplements Culture Job Posting Protective Ethos Senior Health Shop Aipma Fixed Annuity Integrity Marketing Group Final Expense Limra Permanent Life Insurance Carriers Disability_Insurance Retirement Planning Bestow Equitrust Web Meetings Insurance Fraud Securian Financial Tax Season Wink Long_Term_Care Myga Women Global Atlantic Lincoln Financial Group Secure Act Regulations TransamericaContact Us
800.783.5206
2041 E. Square Lake Road, Suite 100, Troy, Michigan 48085-3897
About Us
For more than 40 years, AIP Marketing Alliance (AIPMA) serves as a premier life insurance and annuity distribution partner to provide full-service support to independent wholesalers, brokerages and agents from our Troy, Michigan office. Copyright 2023