About a year ago, in anticipation of potentially increased tax rates in 2011 for most of our clients, I talked about tax equivalent yields using life insurance as an investment vehicle. You know the story, the deferred taxation on inside build up in life contracts and the ability to take income as a loan make life insurance a potential solution to the tax bite that comes with investment success.

Fast forward to today, and its time to take another look at this topic, but perhaps through a different lens. Why another lens? Time to look a little further into the past for that one. Remember 2008? I'm sure you do. Individual net worth took a huge hit as the markets tumbled. One of the remedies we talked about at the time was to look to life insurance to replace some of that lost wealth. There were even leveraged strategies using borrowed funds to do it. Whole Life came back in to the conversation as producers and clients alike looked for safe havens.

Looking at the recent economy, it occurs to me that now is a very appropriate time to revisit some of these strategies, as the evidence we might be in for a bit of a wild economic ride begins to mount. Rather than react, perhaps it is time to diversify away from equities into a more predictable vehicle before the wheels come completely off the economy? The shift, or new lens, from one year ago when we focused on inside build up is to look to the death benefit that is the foundation of life insurance.

Keeping things simple, I looked at some single pay designs using $100K dropped in to a Guaranteed UL contract. Assuming Preferred rates, we have some compelling results:

• Male age 45 - IRR on Death Benefit at age 85 = 4.63%
• Male age 55 - IRR on Death Benefit at age 85 = 4.85%
• Male age 65 - IRR on Death Benefit at age 95 = 5.15%

So now let's put this in perspective. This return is guaranteed. There is minimal risk to principle, as this contract also has excellent projected cash values (just in case the client changes their mind at some point!) and these returns are tax free.

So where could we apply this strategy? We have talked about using life insurance for asset transfer to the next generation quite a bit lately and this certainly supports that strategy, but what about the current generation? Does this make sense for them economically? Maybe. If there is a significant age difference between husband and wife a life insurance strategy may be a great strategy to shore up her financial well-being later in life.

The bottom line is that our clients are tired of seeing their net worth shrink. Coming in with a recommendation other than "stay the course" may be just what the doctor ordered. Taking some chips off the table and placing them in a life contract may be the perfect prescription.

PS - Want to see the illustrations from the above? Send me an email and I'll send them right over.