Neutralizing volatility: How investing in life insurance insulates you (in part) from market instability

In volatile markets like the ones we are experiencing right now, savvy investors implement risk management strategies. Asset allocation, geographic diversification, sector diversification, and alternative investments, like hedge funds and private equity, are common strategies adopted to moderate concentration risk.
While these tactics have proven potential in helping to enhance portfolio resilience, they can’t, and don’t, guarantee the alleviation of downsides. But one solution can offer some protection against market fluctuations and it has immense flexibility: life insurance. PCS by Mercer International CEO, Anubhav Bhushan,* answers some questions on the investment advantages of life protection solutions.
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An investment solution that balloons?
We are repeatedly told, via a world of disclaimers, that there are no guarantees when it comes to investments. Even traditional safe havens such as bonds (which almost always must be held to maturity to realize their maximum value) are predicated on factors such as interest rates and defaults. However, some investment returns are more assured than others, and life insurance payouts offer a dependable return.
In a stark representation of the duality that exists in life, death, with a tailored life insurance solution, instigates a substantial payout. Whilst the trigger event, the passing of a loved one, is a deeply difficult experience, the benefit claim is a positive consequence.
And even though the insured person doesn’t benefit from the long-term investment; she/he does have the fulfillment of knowing his/her family will be financially secure into the future. To paraphrase Warren Buffet, your beneficiaries will sit in shade some day because you plant a tree today.^
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Where is a good place for investors to begin their research into life insurance?
Life insurance for high net worth (HNW) individuals should always be tailored to specific circumstances as HNW lives and finances are complex. And as there are numerous solutions and possible combinations of solutions available on the market, all potential investors should seek professional advice. That said, universal life insurance provides a good illustration of the potential advantages when investing in life insurance.
Universal life insurance offers high flexibility in premium payments and allows policyholders to adjust their death benefit and coverage as required. It also has the potential for cash value growth over time, which can be accessed for various purposes when liquidity is needed. Finally, universal life insurance may be used as part of a tax management strategy*** for wealth transfer and estate planning.
Universal life insurance can lay the foundation for a high net worth portfolio, providing unambiguous financial protection and potential growth opportunities for policyholders and their beneficiaries.
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began his PCS by Mercer career in 2008 and was appointed to his current role as CEO (International) in 2021. Based in Singapore, Anubhav leads the International Team in providing insurance-linked solutions to clients across Europe, Southeast Asia, the Middle East, and the Indian diaspora. Anubhav also continues to work with PCS by Mercer bank partners in Switzerland and Dubai.
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