In goal based planning, insurance products can add significant value to a client's portfolio or plan by transferring undesired risk to an insurance company. Broadly, insurance products either furnish risk protection by providing a benefit when events occur or generate income. In addition, insurance products have some unique tax advantages that may be beneficial for estate planning, survivor-ship planning and legacy planning. Just like all other planning areas, looking at each individual's goals will determine the need. 

Life Insurance

Life Insurance pays an income tax free death benefit on the death of the insured life or lives. It can provide for lost income in the event of death of the owner during a clients working years or in retirement. It can be a viable leveraged solution for a tax-free legacy benefit, or liquidity to allow an orderly disposition of non-liquid assets such as real estate or a business ownership share.


All annuities are insurance products and issued by insurance companies. If you want to shift certain types of risk (investment risk, longevity risk) to an insurance company, an annuity is one way to do it. 

Shifting investment risk occurs when you buy a fixed or indexed annuity. The insurance company takes your money, they invest it, and in return, they pay you a guaranteed fixed rate of return or a return based off of an external index. They bear the investment risk, not you. 

Shifting longevity risk occurs when you buy an income annuity that pays you a guaranteed monthly income for the rest of your life. No need to worry about outliving your money anymore; this risk has been shifted to the insurance company. The very best thing annuities are great at, is to hedge longevity risk; the risk that you might outlive your income. 

Long Term Care

Long Term Care insurance would be in place because it pays a monthly benefit when an insured individual is unable to perform some activities of daily living, such as bathing or dressing. As life expectancy continues to advance, almost every family has to consider the future costs of care as either themselves or parents age. Long Term Care insurance is a consideration of reducing risk in order to protect retirement income or other held assets. With a variety of coverage period & terms, Long Term Care Insurance is an area that must be discussed in all overall financial plans.  

Hybrid Life Insurance w/ LTC Benefit Riders

This type of alternative insurance product is a bridge between traditional life insurance and long term care insurance. This insurance product just like life insurance pays an income tax free benefit upon the death of the insured but allows the death benefit to be utilized in a monthly benefit when the insured is unable to perform some activities of daily living. If monthly benefits are used then any remaining unused benefits would be paid income tax free upon the insured's death. 

Copyright 2016 Three Leaf Financial. Investment Advisory Services offered through Brookstone Capital Management, LLC. (BCM), a SEC Registered Investment Advisor. Three Leaf Financial and BCM are independent of each other. This website is for informational purposes only and does not take into account your particular investment objectives, financial situation or needs, and is not a solicitation or recommendation of any investment strategy. Investments and/or investment strategies involve risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives and investments are not suitable for all persons. For a complete description of investment risks, fees and services review the Brookstone Capital Management firm brochure (ADV Part 2) which is available from your Investment Advisor Representative or by contacting Brookstone Capital Management.  Three Leaf Financial is not endorsed by or affiliated with the Social Security Administration or any government agency. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation. Index or fixed annuities are not designed for short term investments and may be subject to caps, restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.