By Joel Zimmerman

Hedge Stock Market Volatility with Life Insurance

Everyone who has ever invested understands that market volatility plays a significant role in how their investments fare, whether long-term or short-term. Even for those who have been regularly investing with professional help, understanding the ups and downs in the market can either make or break portfolios.

However, there are ways of working around market fluctuations when they are not in your favor. Diversification, or investing in varied forms of investments is one way to help keep liquidity in your control. Borrowing against cash value factor of permanent life insurance is another such example, which we’ll look at in more detail.

How Can Life Insurance Back Up Your Investment Portfolio?

A loan against the accumulated cash value of a permanent life insurance policy often acts as the saving grace of investors during a market crisis, as it is not subject to market fluctuations. Hence, investing in life insurance could be your ticket to sailing through both good times and bad.

Of course, this comes at a cost. Borrowing against your policy has both advantages and disadvantages, making it imperative to consult with professionals before withdrawing or taking loans against the cash value. Despite all that, it has what it takes to get you through the tough times.

Consider the following reasons for investing in life insurance:

  • Life insurance comes to the rescue in case of a portfolio emergency

    Life insurance has what it takes to provide you with much-needed financial aid in times of portfolio emergencies, as some policies not only offer death benefits in case of your premature demise, but in addition have a cash value building on the side. This can be utilized as a reserve when required, as it is a tax-sheltered investment which is not subject to market ups and downs.
  • Cash value of life insurance can be used to cover sudden expensesOwning permanent life insurance is a sure shot way to stay liquid, as the built up cash value can be withdrawn from and even loans can be taken against it, without having to withdraw from other reserves. This allows you to keep your retirement plans and college savings intact even when the market is down. The cash value can be withdrawn against at any time and for any reason, making it ideal to fund sudden expenses.
  • Pass on a legacy to your heirs through life insuranceDrastic market fluctuations can destroy portfolios, no matter how well you’ve planned them. Imagine the funds being accumulated for family expenses, your children’s education fund, or home down payments taking a hit, simply as the market crashes. With an insurance policy, you are in a position to stay afloat during trying times. No matter how bad the market gets, the life insurance policy continues to grow and accumulate wealth that can one day be passed on to your heirs.
  • Life insurance works as a backup plan for investment enthusiasts

    There are all kinds of investors, ranging from those who like taking risks to those who are completely risk-averse. Some choose to bet everything as they only look to gain windfall, while others prefer to invest in safe options even if returns may be lower. If you are an investment enthusiast, life insurance works as a backup plan if all else fails.  Dabble away but remember to hedge your investments.

While the primary reason for investing in life insurance is the fact that it will keep your family financially secure if anything happens to you, there are many more benefits you could enjoy. Get in touch with an insurance advisor and start looking at your options today

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