Balliett Financial Services, Inc.
First off, you need to know that the value of "variable" life policies and annuities depends on the securities markets. They're called variable because much of the money you pay for them is invested in stocks or bonds, which can go down in price as well as up. So, there's no compelling reason to look to insurance products as a safe haven when stocks or bonds are tanking.
Also, you need to remember that all annuities and life-insurance policies are wasting assets: They are worth less and less as time goes by. The reason is inflation. Over time, it robs value and usefulness from both annuity contracts and life insurance. The million-dollar policy you buy in 2008 will probably have the purchasing power of only half a million in 2025, about 17 years from now, whether it is a relatively low-cost level-premium term-insurance policy or an absurdly expensive policy containing cash surrender values. .
Thirdly, the reason many people buy investment life insurance and annuities when the securities markets are weak is that many or most of the people who sell insurance products are genuinely nice, easy to like, and will probably like you back. Insurers know how to hire nice, caring salespeople. The companies do so because they know a certain percentage of people do buy insurance products they don't understand from a salesperson they like who likes them back. Trouble is, the training of their new hires is selective.
So, you do need to know that the training is long on product benefits and short on product failings. Your new best friend, the insurance salesperson, may not even know that insurance products are wasting assets nor that insurance products are dubious choices, at best, when seeking refuge from a recession and/or a bear market.
The easiest way to deal with insurance is to rely on a good coach, an advisor who understands insurance but doesn't sell it -- an advisor who knows, too, about the other very serious shortcomings of insurance products and how to deal with them.
Like our other NAPFA colleagues, we work for our clients, not for commissions We, too, are nice and will probably like you back. We show our clients how to shop for life-insurance bargains. In some cases, money rescued from costly insurance premiums may be enough to underwrite a comfortable retirement, even when invested in U.S. Treasury securities purchased directly from the U.S. Treasury without a sales commission.
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Balliett Financial Services, Inc.
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