The primary purpose of whole life insurance is, before everything, to protect your loved ones in the event of tragic and unforeseen circumstances. However, it can also be used to bolster the security and returns of your holdings while providing supplemental retirement income.

Best utilized as an accompanying element to additional retirement accounts as part of a larger investment portfolio diversified into uncorrelated assets classes, the unique and beneficial attributes of Whole Life Insurance make it a valuable tool for the sophisticated investor. Some of the benefits of Whole Life Insurance that are particularly pertinent to retirees include but are not limited to:

– Tax-Deferred* growth insulated from market volatility

– Passive and Perpetual Compound Interest on Cash Value

– A nest egg of funds generally inaccessible to creditors

– Tax-Efficient* estate planning

Generally speaking, even conservative investment vehicles are at some capacity exposed to market risk and therefore suffer from fluctuating values. This presents a problem for Investors, such as retirees, who rely on their investments for a steady income stream.

Utilizing liquidity from an equity-based retirement account such as a 401K or IRA during a bear market inherently reduces the principal that future returns are based upon. Such debasement of compounding can be especially problematic if done in the earlier stages of retirement.

While the average rate of return is the only factor that matters during the accumulation stage of financial planning, sequence of returns risk becomes more pertinent than ever to investors upon retirement. Simply put, a retiree who is faced with a bear market early into retirement will suffer from a significantly reduced net worth compared to a retiree that is confronted with the same market conditions further down the road.

Some retirees may have enough cash saved to wait out a decline in their investment’s value without touching the principle. Nevertheless, a well-funded Whole Life Insurance policy and the guaranteed income it provides serves as a contingency plan for investors irrespective of net worth.

In this day and age, black swan events that can rock capital markets and derail many years of careful planning are unprecedently common. Keeping this at the forefront of our considerations, Kensington strives to provide efficient use of the versatile asset that is Whole Life Insurance so our clients can focus on what truly matters in life – enjoying the future they worked so hard to build and leaving a legacy for the protection and benefit of their loved ones.