The benefits of flexibility – embracing new options within holistic financial planning

Using life insurance to help protect your clients’ savings goals

With the previous bear market ending in March of 2009, the current bull market has lasted more than eight years, making this advance in equities the second-oldest on record without at least a 20 percent drop in the S&P 500® Index. To the casual observer, this would seem like a purely positive development for the financial services industry, since a booming market usually leads to stronger portfolios, and in turn, happier clients.

This is generally true; however, bull markets also bring their own set of unique challenges for financial professionals, especially those who are focused on helping meet their clients’ holistic planning needs.

As a general rule, growth is good, but when clients see constant growth, they can become fixated on accumulation and forget the other parts of their financial strategy that also need attention – namely protection.

Building a level of protection into your client’s overall financial strategy can certainly come through diversification of their investments, ensuring they have a broad mix of assets so their portfolio is not too concentrated in one area. Usually this amounts to utilizing different types of mutual funds, but can also extend to other financial vehicles outside of equities such as fixed income options like fixed index annuities (FIAs). FIAs provide guaranteed income and principal protection against market loss (any product guarantees are backed by the financial strength and claims-paying ability of the issuing company). Yet, to ensure your client’s financial strategy includes protection, they should explore life insurance as a potential solution in their overall strategy, which provides needed death benefit protection for their beneficiaries.

Life insurance has long been one of the foundations of the financial planning pyramid, but it’s an easy area to overlook when the stock market is enjoying daily gains and everyone is focused on growing their savings. And when life insurance is part of the conversation, it often starts and stops with term coverage, which provides the necessary death benefit to protect against the financial consequences of an unexpected loss of life. But it offers no additional living advantages, such as cash value accumulation potential provided by fixed index universal life (FIUL) insurance, that could complement a client’s financial strategy.

Financial professionals – especially those who are just beginning to embrace a holistic planning approach that must address all aspects of their client’s financial life – need to take note and truly explore all available opportunities. This means understanding all of the different ways that life insurance and fixed index annuities can help provide both a level of protection and opportunity to their client’s long-term financial strategy.

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This content is for general educational purposes only. It is not intended to provide fiduciary, tax, or legal advice and cannot be used to avoid tax penalties; nor is it intended to market, promote, or recommend any tax plan or arrangement. Allianz Life Insurance Company of North America, its affiliates, and their employees and representatives do not give legal or tax advice. Customers are encouraged to consult with their own legal, tax, and financial professionals for specific advice or product recommendations. (06/2018)

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

Products are issued by Allianz Life Insurance Company of North America and variable products are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.