April 19, 2023; Duration: 08:18
A recently published study claims that taking income from permanent life insurance and annuities in retirement can create a better outcome for investors. Ernst & Young compared five different strategies including investments only, investments and term life insurance, permanent life insurance and investments, deferred income annuities, and a combination of #3 and #4. In their comparison, Ernst & Young considered insurance products part of the fixed income allocation and bond replacements. They also used the permanent life insurance as a volatility buffer, where they access the cash value of the policy to pay for lifestyle needs during periods of market volatility, similar to the concept in the best-selling book, The Volatility Shield. They ran 1,000 Monte Carlo comparisons with the goal of measuring sustainable income, and they used ordinary income tax rates. Each income scenario sustained a minimum of 90% probability of success. In the investment-only approach, it’s only inefficient f…
