b'and bonds markets. Some investors usevolatility, but you will also find that theto offer tax-advantaged growth, assist in non-correlated asset classes to temperreturns are lower.income planning, and to transfer wealth to the behavior of the other asset classesThis is why it is important to consider thefuture generations.and provide some stability in their overallcash value in whole life as a diversificationWhy whole life is not for everyoneportfolios, especially during volatile markettool and to understand that the returns cycles.should not be compared to riskier assetDue to its complexity, whole life is widely What is Whole Life? classes like the stock market. Fewmisunderstoodby financial advisors and advisors would suggest an investmentthe public. Occasionally, there is controversy Whole life insurance is, as the name states,allocation of 100% stocks. Most mayaround whole life insurance because its life insurance. It falls in the category ofsuggest a portion of your investmentconsidered by some to be expensive, permanent insurance, in contrast to termbe placed in a safer, historically lowerinappropriate, or low performing. The truth insurance which provides only limitedperforming asset class like bonds tois that whole life is a valuable, multi-purpose coverage. Permanent life insurance staysreduce the overall risk in the portfolio. tool, but it is most certainly not for everyone. in force for as long as the owner pays the premiums to maintain the policy.It is much more appropriate to compareWhen and why would you consider whole the qualities and returns of whole lifelife?Beyond offering permanent coverage,to other safer assets like municipal whole life is a life insurance product withbonds, CDs, money markets, and savings1. You need life insurance. (You care for many other features, the most notableaccounts. When this comparison is made,someone or something and want to ensure of which is a savings componentyourwhole life can be evaluated more fairly,that they are provided for when you are no premiums provide both life insuranceand the benefits can be more clearlylonger able to do so yourself.)coverage and accrue whats called a cashseen.While whole life has had historically2. You have a student debt repayment strategy value.The cash value accrues over time,similar returns to these types of vehicles,in place.frequently with contractual guarantees, asthere are contractual guarantees and tax3. You have 3-6 months of living expenses in well as additional potential growth throughadvantage growth on the underlying cashcash set aside for emergencies.company dividends from the issuingvalue, options to include riders providing company. While the savings feature of adisability and long-term care protection,4. If you plan to purchase a home, you have whole life insurance policy may provideas well as death benefits for legacydone so. stability in ones overall financial picture,planning. 5. If you plan to purchase a practice you have its also important to point out that it willdone so, or if this is not your plan your not yield returns that are as high as otherDue to these features, whole life is used inemployment and income are stable.asset classes. You will be exposed to lesssophisticated financial planning scenarios Continued on page 22AAP Periospectives| 21'