If you typed, “inflation proof investing” into your search bar recently – you certainly aren’t alone.
With inflation at a 40-year high and interest rates on the rise, investors are taking a moment to recalibrate.
We know it’s crucial to explore the variety of investment strategies for today’s less certain economic environment.
Similarly, those who are just starting out with investing may be feeling discouraged by the market’s volatility and unsure of where to put their money.
In either case, one of the smartest things you can do to protect your wealth in times like this is to carefully, wisely diversify your assets.
While investment assets like stocks, bonds and mutual funds fluctuate based on the market’s performance, assets with guarantees (such as a premium financed life insurance policy) can serve as a hedge against swings in the market.
My firm specializes in PFLI. With each passing week, we’re seeing more people beginning their research into this type of investment strategy.
Why?
Because premium financing provides enhanced access to an asset with built-in guarantees, which can provide great balance and security when living through volatile market conditions.
In addition to its obvious pros (greater death benefits and tax-free growth), premium financed life insurance is an inflation proof investment thanks to the way it builds wealth.
These policies hold cash value, and the insurance company credits the policy interest on that value, which is an asset to the policy owner.
Even as inflation continues to rise, PFLI policies are largely unaffected, because the interest paid by the insurance remains relatively stable.
Do Rising Interest Rates Impact Premium Financed Life Insurance?
The thing that makes premium financed life insurance such an attractive investment strategy in a volatile market is that it provides protection against long-term interest rate risk.
How does it work, exactly?
Insurance and tax regulations provide policy owners the ability to access life insurance policy values tax-free by taking a policy loan.
This policy loan has a fixed or capped interest rate, which provides policy owners a very beneficial hedge during a period of rising interest rates.
These policy loans commonly are paid back from the death benefit proceeds.
Of course, as with any loan, the interest rate on your PFLI loan will vary based on the federal funds rate at the time you secure your loan.
Remember: We are currently still experiencing historically low interest rates. The value received by using responsible leverage is a great way to maximize earning potential.
How Does Premium Finance Life Insurance = Inflation Proof Investing?
Premium Finance Life Insurance can help you build wealth while protecting your financial future during periods of inflation. That is because it serves as a reliable asset that you won’t have to worry about during uncertain times due to its guaranteed downside protection.
If your goal is to find inflation proof investing strategies, this is certainly one to further research.
Consider this:
Pulling cash from other investment assets in a down market is typically ill-advised.
You need those assets to remain where they are so they can recover.
PFLI is different.
When used as a buffer asset within your investment portfolio, meaning used as supplemental income separate from your nest egg, you can safely access income during poorly performing markets.
For many investors, this strategy provides peace of mind:
It enhances their ability to comfortably retire because they are not beholden to the market.
It also gives them greater access and control over their wealth through volatile conditions.
Protect Your Wealth Against Inflation Today
When I founded Enhanced Funding Solutions, I decided to focus exclusively on PFLI as a financial solution for our clients because I know it works.
I secured my first premium financed life insurance policy over fifteen years ago.
Needless to say, I’ve seen this investment strategy work for me and my family through many ups and downs of the economic cycle, and you can too.
Reach out to me today to explore your options. I look forward to answering any questions you may have. – Jeff Faine | jeff@enhancedfunding.com or 773-318-9608