Sequence of Returns Risk and Indexed Universal Life Insurance

We’ve addressed the subject of sequence of returns risk in the past. We’ve even discussed it on the new Insurance Pro Blog Podcast. This subject has become a hot topic in more recent years as financial advisors now struggle to build retirement income plans for their clients and face the problem that few, if any, training programs touch. Why isn't their more specific training for advisors on this issue?  Speculating about that would be an interesting topic for another day.

Today, I want to talk about how indexed universal life insurance is affected by sequence of returns risk especially in the context of using a policy to generate retirement income.

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Same Stock Market, Two Different Decades

We know the stock market is volatile and we know that stock market losses happen. Traditional advice is that losses can be recouped with time so any investor whose stomach twists into knots when he or she opens a 401(k) statement need not worry if he or she can wait out the correction.

For the most part, there is nothing wrong with this advice, but what happens when one doesn’t have time to wait out the correction?

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