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Thanks, Larry!

Updated: Jul 20, 2023

Over the last couple of years, my family has fallen out of the custom of attending church every Sunday. Some of that had to do with the pandemic, and then some of it had to do with a couple of young pastors’ compulsion to spew newly woke drivel at every sermon, and then some of it just had to with my family all climbing into my bed on Sunday mornings to watch webcasts of the services at a church in Colorado where my esteemed friend, Reverend Mark Feldmeir, currently preaches. (I encourage you to read his books, You Need to Get Out More and A House Divided.)


So, over the course of the last couple of years, I have come to watch Meet the Press every Sunday. I used to watch recorded versions of it, but watching it live is great …usually while drinking a cup of coffee, perusing real estate listings on my laptop and reading the latest Barron’s-- because I’m old. ...Old enough to miss Tim Russert.

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Former Treasury Secretary Lawrence Summers was on Meet the Press this week, and I’ve got to admit, it was pretty refreshing. Dr. Summers has a history of putting forth so many possible scenarios that he can basically never be wrong, but he was a little-- just a little-- more direct on Sunday morning. You can see the entire interview here.


He said the thing that we all expected him to say, that we’re going to have a recession. (As any reader of this column knows, I expect he’s only a few months late to that party, but hey, better late than never.) He made another comment of real interest, though-- he kind of just slipped it in there— saying that he recently bought life insurance.


Larry Summers is 67 years old.

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There are a million reasons why buying life insurance in a bear market makes sense. Surprised to hear that from an advisory group that practices such active portfolio management? Don’t be; these days-- if you qualify-- you can buy policies that provide tax deferral, guaranteed rates of return, a wide range of investment options and flexible premiums. You can essentially combine tax-free death benefit protection with the ability to grow your cash value on a tax deferred basis and then even access the available cash value tax-free via policy loans and withdrawals.


Permanent life insurance offers coverage for your entire life, so you and your family are protected from the whole gamut of risks for which we usually buy it. But beyond the protection element of permanent life insurance, your tax deferred cash value can help supplement retirement income and cover emergencies or other future expenses. For example, we frequently use life insurance to fund clients’ college tuition goals because, in the event a client’s kid runs off with the Hells Angels, permanent life insurance is flexible and can be used to support the family’s changing needs, all while providing the death benefit protection needed by most families with kids who are that age.

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What’s really interesting is that, even with younger adults putting off parenthood at ever increasing rates and getting priced out of the housing market, more and more younger adults have been looking for life insurance since the pandemic began. Applications for life-insurance policies jumped 3.9% year-over-year in 2020 in the U.S., according to MIB Group’s Life Index— the biggest annual increase in records going back to 2012. Applications were up nearly 8% in 2020 among people under age 45. In 2021, applications rose 4.3%, with the most growth coming from those ages 31 to 50.


Maybe that just goes to show that millennials are more financially savvy than they’ve been given credit for. Insurance makes a lot of sense in a bear market, often regardless of whether you own a house or have children.

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So, thank you Larry Summers for that little tidbit this weekend. I’m often asked why I didn’t found my own registered investment advisor (RIA) firm when I left Wells Fargo years ago, and one of the biggest reasons is insurance.


Insurance is not a fee-based product, and RIAs typically cannot provide it without being joined at the hip with a broker dealer and an insurance agency. There are numerous other regulatory disadvantages that make it extremely difficult for RIA’s to offer insurance. Sure, there are additional reasons unrelated to insurance for utilizing a broker dealer, but insurance offerings are certainly what made the biggest difference in my decision to keep RG affiliated with a broker dealer, even though the vast majority of our business is fee-based.

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Life insurance is the cornerstone of financial security, and it’s the primary vehicle that enables most strategies for passing wealth on to charity and family, even when the economy is doing great. It just so happens that the living benefits of permanent life insurance become even greater when the economy slows; it’s one of the most valuable risk management tools that investors have at their disposal.


In this market-- that we currently view as less than red-hot-- the tax benefits, premium flexibility and guaranteed rates of return of life insurance have come into new focus. So, thank you, Dr. Summers; I’m not sure you even knew what you were doing when you said it, but you may have helped a lot of people on Sunday with your subtle reminder.






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