Many people believe that inflation is the primary weakness of insurance products. That is only true if you use insurance products in a passive manner. Following are a few suggestions to make you and your clients' wealth inflation-proof.
- Focus on dividend-paying, cash-value life insurance policies. Because dividends are based on current earnings, the insurance company can take advantage of investment opportunities that offset inflation. Tax deferral also helps offset the damage caused by inflation.
- Consider equity indexed fixed interest annuities. In the next boom and bust financial cycle of the next decade, these annuities can provide growth and guarantee safety. Use them as part of a well-diversified financial plan.
- Remember fixed interest multi-year guarantee annuities. By laddering maturities, you can reallocate money to higher interest rates as they occur. This method provides guaranteed safety.
Our industry provides guaranteed paychecks for life. We must continue to help people grow their assets, but we must focus on finding ways to provide growth while protecting principal.
