New products and strategies proliferate in the insurance industry as companies work hard to keep up with modern needs, but advisors should not lose sight of the basic purposes of products that can benefit their clients, even in a changing financial environment.
So says Gavin Morrissey, advanced planning consultant to Commonwealth Financial in San Diego. His department helps Commonwealth's advisors implement the best strategies for their clients. One of those strategies is an old one: the use of life insurance as life insurance.
"It seems advisors are using life insurance for what it was meant: a death benefit," says Morrissey. While policies have, of course, figured prominently in "many creative strategies, such as retirement, cash accumulation, and deferred compensation," now Morrissey says he's seeing them used "either to leverage the estate or to solve some problem that has come up in estate planning."
With the high national divorce rate for first and second marriages, Morrissey says more advisors are coping with the needs of extended families; the complexity factor rises as family groups include multiple ex-spouses and several sets of children of various ages, perhaps on both sides.
One case Morrissey helped a planner resolve involved a client with adult children from a previous marriage and a six-year-old from his third marriage. The client's net worth was around $10 million, and the third wife was close to his grown children in age.
