Life Insurance is NOT an Investment


Life Insurance is NOT an Investment

By:  Brandon Roberts of The Insurance Pro Blog


November 18, 2014


But it is an alternative to having your money invested in what people traditionally think of when they use the term “investment”. Most commonly the list of traditional investments includes: stocks, bonds, mutual funds or ETFs.

In the past few years, you've probably heard a fair amount of buzz concerning “alternative investments”.

But what does that mean?

In the highly regulated world of investments there are some specific things that typically refer to alternative investments: Hedge Funds, Non-listed REITs, Private Equity, Gold, Fine Art, vintage Ferraris, Wine, etc.

You get the picture.

Basically, things that aren't directly related to the stock market.


Staying out of the Mainstream


Some people spend all of their life trying to fit in. They hop onto whatever trend they believe is fashionable and hope that others will accept them socially for their efforts.

For those people, this strategy is probably a bad idea. But let me appeal to your inner greed factor for a minute and ask you if you really want to fight like hell to be entrenched in mediocrity.

A lot of people make excuses for being average. There’s a mental twitch that says it’s okay to be part of the crowd and when we see examples of those worse off than ourselves, we rationalize our bad behavior as being “at least better than those people.”

Marketers are aware of this fact, and use it to influence behavior by manipulating impressions to leave people with the notion that everyone else is doing it, so you should, too.

Please don’t fall for this.

You don’t become spectacular (at least not in my opinion) until you have the ability to prove that your life isn’t influenced by sweeping trends. This isn’t to advocate for living in a cave like a hermit, it’s a call to the importance of hedging.

There are plenty of people who have the decline of the stock market as an excuse for their unfortunate financial situation. I’ve met plenty of them.

I’ve also had the fortune of meeting people who motored right through 2008 with little trouble at all, and for the most part, I’m one of them.

If having something to complain about is your thing. By all means stop reading and go look for something to complain about.

But if you’re the type for whom peace of mind is a coveted feature. I have something we’d like to share with you.


Think Different(ly)


Remember the Apple marketing campaign that began in the late 90′s?

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It was one of Steve Jobs’ first initiatives when he returned to head the company he started. He explained the concept behind the campaign as an awakening to the notion that our society’s traditional paradigm (living your life within the confines of what we accept as “normal”) was useless.

Our world and its structure was created by people no smarter than you and I. Furthermore, there is definitely something to be gained by not being confined to “normal”.

It turns out that being “normal” when it comes to financial planning is a frightening notion (at least in my opinion). So, buried in the bag of good tricks, we have the alternative investments playbook.

Alternative investments are typically classified as investments that exist outside the norm of retail investment products available to the investing public (i.e. stocks, bonds, mutual funds and some precious metals).

Alternative investments typically have the following key characteristics:

  • Low or no correlation with major stock markets

  • A somewhat exclusive buy in or minimum investment threshold

  • A lower degree of liquidity

  • A somewhat hide-able asset


What do all of these characteristics have in common?

They are all traits that we see in the portfolios of wealthy, high income earners.

And now that you know how we would normally classify an alternative investment, we'd like to propose something to you.

Why not use cash value life insurance (universal life or whole life) as an alternative? Yes, I did say that “Life Insurance is NOT an Investment” and you can perform your due diligence on that statement. You will find that every insurance regulator in the country agrees with me on that.

However, the great thing about cash value life insurance is that we get the highly coveted features of low or no stock market correlation and a somewhat private or hide-able asset without the drawbacks of an unreasonable barrier to entry, difficult valuation, and liquidity risk.




I’ve managed to build a practice that works with a fairly sophisticated clientèle.

My client list includes such professionals as Engineers, Financial Analysts, Medical Specialists, Attorneys, and Accountants.

These people tend to ask a lot of tough questions. They push hard for answers. And they love cash value life insurance.

A lot of them are looking for an alternative to bring to their portfolio and I’ve been intrigued by how they look at a lot of traditional financial advice (with great skepticism).

Some of these people work for companies that manufacture various investment products (mutual funds, managed money products, hedge funds, debt obligations, etc.) and they understand the limits of traditional investment products.

Some have done really well with traditional and alternative investments. Still, they understand the role luck played in their good fortune and realize they need to balance risk.

I don’t want to come off as arrogant, but based on the sophistication of the people I’ve worked with and the success I’ve witnessed in setting up their poloicies (as well as my own) I don’t feel all that challenged by the non-believers.


Validation Part 2


Why take my word for it?

Dan Solin, a syndicated financial writer best known for his Smartest Series books, wrote an article on this very subject back in 2010. What’s even more interesting is that he pointed out the weakness gold poses with respect to its extreme risk and poor long term yields the gold bugs would like to ignore.

I also got a kick out the comment section where “TorllDiddy” beat the gold war drum and went so far as to make a prediction about the double dip. January 1st as he put it. He didn’t specify of what year, so I suppose he’s still not technically incorrect.


Those in the Know


I’ve never once had a client who after coming to understand how cash value life insurance worked, decided it wasn’t for them. I’ve run into a lot of poorly educated people. Those who have fallen prey to misinformation.

But none who held the same negative opinion after learning how it really worked.

Those with some experience (and especially those with a deep understanding) have always been pleasantly happy with what cash value life insurance has to offer. Not to be cliché but a lot of them are mad they didn’t figure this stuff out earlier.


What Next?


If you're like most people, you're not yet sure that the strategy we are proposing is a good fit for you. That sentiment is 100% valid. Please take your time and feel free to browse our site thoroughly. There are more than 400 blog posts and podcast episodes to choose from.

Here is a small selection that might help you get started and that you might find useful:


Indexed Universal Life Insurance Income Comparison

Single Premium Whole Life Insurance: A Really Safe Place to Store Cash

Does Blended Whole Life Insurance Really Work?

Use Cash Value Life Insurance to Create a Retirement Income

Compound Annual Growth Rate vs. Average Annual Return–Wall Street's Greatest Sleight of Hand


And here is a link to our weekly podcast–The Financial Procast. To hear previous episodes click the picture below.

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After reading this, you probably have questions and that is perfectly understandable.

If you would like to direct those questions to us directly, use the contact form below. We respond within 24 hours to all inquiries.

People contact us on a daily basis to discuss how life insurance may fit into their financial plan, and we are happy to help answer questions you have about where these products might fit into your plan.

Or if you prefer, you can call us directly at 1-888-834-0909. You will speak directly to Brandon or Brantley.