How Can Life Insurance Help When Markets Are Volatile?

How Can Life Insurance Help When Markets Are Volatile?

How Can Life Insurance Help When Markets Are Volatile?

Here are some things to think about:

  • While Life insurance is primarily to provide a death benefit, it can also benefit the owner while living
  • Volatility in markets can be a very stressful time
  • Having a life insurance policy could help diversify your assets

Volatility happens. Nevertheless, whether the ebbs and flows of the markets are turbulent or calm, it is important to stay focused on long-term financial objectives. Life insurance could be one of the vehicles to help you reach your financial goals and be part of your retirement planning, and it can even stand the test of time during market volatility.  

Volatility can influence what’s top of mind

Market volatility can drastically influence your concern levels on a variety of money matters, whether it’s paying for long-term healthcare expenses, maintaining job or income security, or concerns about supporting your dependents financially. Some of the issues that may also be top of mind during periods of market volatility:

  • Future savings: Growing and protecting savings efforts to help pay for future small or even large expenditures, such as funding a child’s college tuition or a down payment on a house. 
  • Preparing for or living in retirement: Supplementing retirement income can be another financial concern when living through marketing volatility. In fact, only about 30% of pre-retirees or retirees have developed a specific plan or strategy for generating income from retirement savings.1
  • Business continuity: Attracting, retaining and rewarding employees, and ensuring that a business can continue to operate through tough economic environments.

A life insurance policy that allows increased coverage and enhanced flexibility to accommodate unexpected events can help offer solutions for many common financial concerns. Although people primarily purchase life insurance so their loved ones may have financial benefits following the insured’s death, life insurance can also benefit you while you’re still living. Sometimes referred to as “living benefits,” funds you can access during your lifetime may come in the form of a policy rider or if a cash value2 component of a policy is available.

Guarantees when markets decline

If you opt for a life insurance policy that can accumulate cash value, some policies offer guaranteed minimum growth of that cash value, no matter what markets do. Others that are tied to the performance of an index3 offer greater potential growth while guaranteeing a “floor” of 0% -- even in a year where markets decline, the policy would have no growth, but also no investment losses.

Financial benefits to strengthen and diversify your overall portfolio

While you can’t control market highs or lows, you can take actions now that help diversify your financial portfolio and potentially help insulate you from market fluctuations. Life insurance is a commonly overlooked financial asset but can be a valuable tool when it comes to volatility and preparing for long-term financial goals.

Agents can make a difference

While often uncomfortable to talk about, market changes may present opportunities that can help you protect your family’s financial future.  Not knowing how to decide how much and what type of life insurance they want to buy is one of the top reasons people give for not having life insurance, according to a recent survey by Life Happens and LIMRA4 A financial professional may help clarify issues and options you face as you make these choices.

Learn more about how to choose a policy that makes sense for your circumstances with help from the Farmers Life Compass® tool.

FNWL_IQ_Volatility    04-23

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The information contained in this page is provided for general informational purposes only. The information is provided by Farmers® and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.

LIMRA, Building a Secure Future: Retirement Planning Activities, p.2, Aug 2022

2 Cash values may be accessible through policy loans or partial surrenders. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a modified endowment contract, loans and surrenders may incur taxes and penalties.

3 Policy does not directly participate in any stock or equity investments.

4 The 2022 Insurance Barometer Study, LIMRA and Life Happens, April 2022

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