A modest proposal for Millionaires suffering "Investment Fatigue"

A blog post on Private Wealth Magazine's blog reports on studies indicating that "Many millionaires no longer enjoy doing their own investing..." Among ultra-high-net-worth investors ($5-$25M net worth,) only half of those age 65 and up say they enjoy doing their own investing; fewer still among younger investors want to be actively managing their investments.

Happily, those younger ultra-high-net-worth investors have an attractive option for part of their portfolio that their older counterparts probably don't - allocation into an instrument that behaves like a zero-coupon bond ... put in $X now, and over a long time span the maturity value will represent yield comparable to respectable fixed-income benchmarks. Unlike the zero-coupon bond, however, this instrument is a wrapper around a professionally managed conservatively allocated strategically laddered bond fund, and the wrapper comes with benefits that naked zeroes don't have. The wrapper is a medically underwritten cash value life insurance policy, which means:

• Accelerated maturity in the event of premature death
  Wealth accumulation plans, when done well, are structured to reliably deliver a targeted increase in a client's wealth over a long period of time. Even better are plans that address the unlikely circumstance of the time horizon suddenly being cut short; providing that hedge is a task to which life insurance is uniquely suited.
• No tax liability on "phantom interest"
  Unless comprised of relatively lower-yielding Treasury issues or held inside a qualified plan, zeros generate an annual tax liability on the imputed interest earned even though no interest income is actually received.)A life insurance policy's cash value increases are not taxed unless actually withdrawn from the contract (and even then, possibly not until basis has been returned.)
• No tax liability if held to "maturity"
  When paid out as a death benefit, the proceeds of the life insurance policy are income-tax free to the beneficiaries, even though increases in the contract's cash values were tax-deferred.
• Discretion and creditor protection
  The cash value balances of a life insurance contract do not appear on a brokerage account statement; nor are policy values subject to routine reporting to the IRS. In most jurisdictions, a cash value life insurance enjoys significant creditor protection relative to other assets owned outright. And unlike most other assets owned outright at death, the death benefit proceeds of a life insurance policy will not be subject to probate.

An insurance solution for a very niche demographic

From the online magazine Private Wealth's, an article titled The Next Step In Alternatives:

"One tax management solution, in fact, has come to be recognized by some high-net-worth investors as a perfect complement to their hedge fund investments: private placement insurance—in the form of both life insurance and annuities.

These products essentially allow accredited investors to put alternative investments inside a tax-free insurance wrapper. The products take advantage of long-standing tax rules that allow income earned on assets inside insurance or annuity policies to accumulate free of taxes. Moreover, gains remain tax-free when distributed as life insurance proceeds—as a death benefit or the cancellation of loans made to a policy owner—and tax-deferred if distributed as annuity benefits.

These features are of great value to hedge fund investors, who understand the impact ordinary tax rates have on gains derived from short-term trading and credit-oriented investments, phantom income produced by market-to-market elections by fund managers (often to justify fees), and PFIC treatment of offshore fund investments. Hedge fund investors have learned that taxes paid on current gains are not recovered if losses are suffered in later years. Those losses can only be carried over to future years when or if gains are realized."

Survey Finds that LTC Costs Continue to Climb - Long Term Care - Life and Health Insurance News

Survey Finds that LTC Costs Continue to Climb - Long Term Care - Life and Health Insurance News