Optifino CIO Michael Doniger’s eBook “More Than a Policy: Life Insurance as a Wealth Strategy,” explores how modern life insurance planning has evolved from a transactional product sale into a sophisticated component of modern wealth management.

Why It Matters Now

According to LIMRA, (source) more than 74 million Americans still lack coverage, and another 25 million are underinsured. Even among policyholders, too many own policies were “sold” rather than strategically designed. With Regulation Best Interest (Reg BI) expanding into life insurance, advisors are now required to act in their clients’ best interest (source). That means it’s no longer enough to provide coverage- now you’re on the hook for ensuring their coverage aligns with their long-term financial goals.

Tools for Wealth Building

The eBook highlights two foundational approaches using:

Whole Life Insurance – a steady, predictable approach where guaranteed cash value growth creates a disciplined savings plan insulated from market volatility. Think of it as the “conservative investor’s dream,” with premiums, returns, and long-term accumulation locked in from day one.

Universal Life Insurance – a more flexible option that adapts to evolving financial goals. With adjustable premiums, variable death benefits, and cash values linked to indexes or subaccounts, these policies function as dynamic wealth-management tools, capable of funding retirement, adjusting to market swings, or unlocking liquidity along the way.

Beyond Protection: The Private Banking

One of the most compelling permanent life insurance strategies is often called the “private bank” or “family bank” strategy. Over time, cash value in a permanent life insurance policy can grow into an asset that can be borrowed against, withdrawn strategically, or tapped in the case of emergencies. The bonus is that liquidity can often be accessed on more favorable terms than traditional lending or retirement accounts.

Clients enjoy the ability to borrow against accumulated wealth without credit checks, while their policy value continues compounding, untouched. Add in long-term care riders, and estate-planning advantages, and it’s easy to see why permanent life insurance is increasingly viewed as an asset class in itself.

Elevating Client Conversations

For advisors, the key takeaway is clear: life insurance should never be a one-dimensional product conversation. It’s an integral part of the wealth strategy discussion, and is capable of delivering tax-advantaged growth, estate liquidity, and legacy planning opportunities that few other instruments can match.

At Optifino, we’ve built AI-powered tools to help you analyze, design, and optimize these strategies with clarity and speed. What used to take hours of illustrations and guesswork can now be visualized in minutes—helping you show clients not just “a policy,” but a path to long-term wealth.

Download the eBook

If you’re ready to rethink how you position life insurance in client conversations, download “More Than a Policy: Life Insurance as a Wealth Strategy.” You’ll gain practical strategies, real-world examples, and insights to help you transform a familiar product into a powerful tool for building wealth and leaving a legacy.

Get the eBook

“I've always wanted to be the best,” says Chicago insurance agent Mike Shean. “The advent of AI made it clear I had a choice. Use it or be replaced by it. So I found a partnership with Optifino where AI makes me better.”

A 30-year veteran of the life insurance business, Shean bemoans the glacial pace of change and innovation in the life insurance market. “The industry is archaic,” he says. “[As an agent], you do what you do because that's how you were told to do it, not because it works well. And you don't think twice about it. You don’t question it."

The “aha” moment that shocked him out of his comfort zone was meeting Optifino Co-Founder and Chief Innovation Officer Mike Doniger at a Finseca conference.

At the conference, Doniger explained how Optifino optimizes financial and life insurance planning with cutting-edge AI to streamline case design and portfolio management.

Shean said, “My first reaction was, ‘Oh, this is what’s going to replace me.’ And then it was fear. ‘How is it going to replace me? What are the other parts of my business that are archaic?’”

But the feeling was brief. As Doniger continued to explain Optifino, Shean became increasingly inspired.

“I immediately understood the opportunity. As our conversations continued over the next several months, and he was able to show me the platform, I thought, ‘How can I get in on this?’ Because this is going to change the game.”

The Problem

Shean works with ultra high-net-worth clients and extremely complex cases: legacy considerations, estate plans, and esoteric trust structures. They take a lot of time to design and execute.

“As someone who's been doing this for close to 30 years, you get used to what the business is.” he says. “You just accept it, until someone comes along and says, ‘No, we're not doing it that way anymore.’”

When Optifino showed him he could compare thousands of life insurance policy permutations with elegant, side-by-side visualizations, he realized what he had been settling for:

• Legacy processes that were clunky, inefficient, and slow, which is particularly painful for large, complex cases

• Frequent back-and-forth with case design teams and delays in responding to client changes and revisions

• Limited platforms and the politics of BGA relationships

• Archaic culture and outdated tech

The Solution

When Shean began working with the Optifino team, he immediately gained real-time visibility and control over case design and product comparisons.

Now, he can promptly respond to client zigs and zags during meetings. The platform gives him expanded marketplace access with objective, data-backed solutions. Being able to lean on a machine learning approach means that he has an extra check on his personal biases. He embraces Optifino’s AI to amplify his talents, not replace them.

And as an Optifino founding agent, he’s helping shape the platform and spread the word about this modern BGA platform that makes elite advisors “bionic.”

The Results

Shean says there were immediate wins.

"Early on, my old shop quoted across five carriers for a large case. The carriers all collectively said, ‘Sorry, we don’t have anything for this guy.’ He really needed much more coverage than the $10 million of insurance he’d gotten with another carrier the year before, and no one at my old shop called THEM to see if they might want to offer him more.”

It was a simple oversight, but one that illustrates his frustration.

“When I told my Optifino team, they immediately asked, ‘Did anyone call the carrier who sold him the $10m policy?’ They dialed up the carrier who promptly sold him another $30 million of coverage within a month.”

Helping clients secure their legacies for multiple generations is what gets Mike in his seat every day. With Optifino, he can confidently do that by helping clients transfer values, not just wealth. And here’s an unexpected result: He’s reclaiming his independence while building legacy for both his clients and his practice.

“I know there isn't a top with Optifino. As an agent, it can make me more efficient, so I can do whatever I want wherever I want. There is no lid on this thing. There are no limits except the ones I put on myself.”

Download a PDF of this Case Study

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available on request. The information in this presentation has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Products and specific product features may not be available in all states, and other limitations or restrictions may apply.

Background: Setting the Stage for Future Success

Let’s use Harvey as an example: a 27-year-old male and part of the HENRY demographic—High Earners, Not Rich Yet. He approached his advisor with a healthy savings habit, but felt he had yet to exhaust his options of tax-advantaged wealth vehicles that could work towards his goal of building the most retirement income. As a self-proclaimed member of the FIRE movement, Harvey was prepared to save as much as possible so that he could create financial independence and retire early.

Harvey’s goals included:

• Building tax-advantaged retirement income

• Embracing risk through market exposure

• Maintaining flexibility for when he started a family

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The Solution: Risk-Tolerant Growth with Built-In Flexibility

After his advisor reviewed his portfolio and risk appetite, he leveraged the Optifino platform to identify the perfect product for his client’s goals: a Variable Universal Life (VUL) policy. The VUL policy provided market exposure and a reliable pathway for growth, insulating against capital gains as he invested in the market within the policy.

This graph compares VUL policies from three of the industry’s most reputable carriers, and illustrates how Carrier A offered the highest Death Benefit and Cash Value among the options. For a $5K annual premium, Harvey was able to secure:

• Initial Death Benefit: $5M at life expectancy (assuming 8% return)

• Projected Cash Value at Age 65: $1M (assuming 8% return)

The graph above compares the projected performance of Harvey’s Variable Universal Life (VUL) policy to a traditional investment account—highlighting the tax draft of long-term capital gains tax on a traditional investment account. The tax-free accessibility of the VUL policy means that the cash value grows to $1,071,389 by age 65, while a traditional investment would only yield $768,807 in accessible income because of the 25% tax drag. While both options offer market exposure, the VUL adds a key advantage: tax-deferred growth, tax-free access via policy loans, and a a tax-free death benefit.

Closing Thoughts

Harvey’s story is a great example of how the right life insurance strategy isn’t just about protection—it’s about potential. Advisors can help their clients start optimizing for long-term goals sooner than many believe, creating trust early in the relationship that they are developing the most holistic strategy. By starting early, the client is also able to minimize the cost of insurance, and maintain their health status later on should they decide to convert to a more protection-oriented policy. Our platform empowers the advisor to make the optimal policy recommendations in minutes—no longer taking days to shop around with each carrier and create analog projections. At Optifino, we empower advisors to identify the perfect policy to contribute to their client goals, no matter the life stage.

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The financial illustrations and other statements within this report, as well as comments made by any individuals are not guaranteed and do not constitute a contract. The information and financial data included here are purely hypothetical and are not intended to predict or project future performance. Any illustration is intended solely for discussion purposes and is not representative of any actual investment results or performance. Actual investment results and performance will vary and are not guaranteed. This information is not intended to constitute any future performance figures and no specific securities are identified.

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Why now?

Beyond the coming Great Wealth Transfer, we are in the midst of major demographic shifts that are shaping men and women—creating divergent paths. By 2030, women are going to be majority breadwinners in the United States for the first time in history. Women are:

• Attending college at higher rates than before

• Buying houses at higher rates than before

• Outliving men, meaning they need to save more for retirement than men

• Spending more money in retirement on healthcare than men

• Paying more for everyday goods, products and services, such as deodorant, haircuts, and dry cleaning, simply because they’re “for women” — known as the “Pink Tax”

• Focusing on friendships over dating and marriage, with nearly 50% of women saying being married was not too or not at all important for a fulfilling life, compared with 39% of men—up from 31% and 28% in 2019 according to Pew

• More likely than men to adjust their career to take on more caregiving responsibilities—such as raising children or caring for elderly family members

How Women Relate to Money Differently Than Men

Beyond the numbers, women are emotionally tied to money in a different way than men. They are more conservative when it comes to investing. They get more attached to the things they own, as evidenced by female investment managers earning higher investment returns than men because they trade less. Conversely, they are more charitable, especially high net worth women, giving away a larger percentage of their wealth as their income rises. Despite this fact, extensive research reveals that financial advisors perceive female clients as having less control over their investments compared to male clients—with over 25% of advisors adjusting their advice based on gender. And this isn’t limited to male advisors, with both male and females advisors being prone to recommending lower-risk portfolios to women—regardless of their actual profile.

How can financial advisers better serve women?

About 90% of women are going to be responsible at some point in their lives for their finances, yet the majority of advisors say they make up no more than 30% of their client base. Over 80% expect that number to grow in the next five years, however this will be dependent on understanding the differences between the genders when it comes to their emotional attachments to money. Given how many women feel patronized or ignored by their financial advisors, advisors must shift their approach to advising them, both in terms of content and frequency. The top reason advisors said they’d been fired by their female clients was lack of timely communication, so it's important advisors ask for how and when their clients want to be contacted.

Women want to be spoken to in a different language than men, that’s comfortable to them. As Cary Carbonaro—a certified financial planner and the author of the new book "Women and Wealth,"—explains, male advisers routinely talk about beating the S&P 500 by using sports analogies. She emphasizes that women are not concerned with beating the market, they care about whether they are going to be okay, whether they will run out of money, and whether their children are going to be okay. Approximately 65% worry they will outlive their retirement savings. They contemplate each financial decision more, whether it's going on vacation or buying a second home, because the stakes are higher for them. Their financial journeys often include career breaks, caregiving responsibilities, and longer life expectancy. They need confidence that their advisors can tailor plans for these differences.

The Takeaway

The key is not dumbing it down, but framing the conversation in terms of life goals, rather than dollars and cents and jargon. Research indicates that women are asking for long-term planning aligned with their life goals, jargonless communication that builds trust, and a partnership that reflects their values and priorities. Advisors need to understand the social dynamics that also present challenges for women breadwinners, and how they might relate to their friends who are not the primary breadwinners in their family. Advisors must tailor strategies to reflect life stages and advisors will likely turn to new technology-powered financial tailoring platforms to ensure objectivity—like our goals-based permanent life insurance tailoring technology at Optifino. And finally, advisory firms need to diversify their advisory teams, specifically recruiting more women and listening to their perspectives on how to improve.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Background: Crafting a Personalized Plan

Let’s call them the Barrys. The Barrys, a 40-year-old husband and a 36-year-old wife, came to us seeking to diversify their financial strategy and develop a more holistic portfolio outside of their investment portfolio—one that offered more than just the catastrophic protection their previous term policy provided. Given their relatively young age and their expectation to work many more years, the clients had time to take on moderate risk, allowing their investments to compound over the long term.

With a significant investment portfolio, their goals were:

• Introduce greater flexibility and long-term security

• Mitigate risks while maintaining exposure to market growth

• Create a tax-advantaged foundation that would build generational wealth

The Solution: Balancing Risk and Reward

After evaluating their needs, we recommended a portfolio of policies that would create flexibility for them and build tax-advantaged wealth for their annual budget of $50k.

The two 20-Pay IUL Policies on the parents offered market exposure and a reliable pathway for growth, with the flexibility to convert into a policy with a guarantee later in life—when their goals were more conservative.

Policies on the Parents

• Annual Premium: $40,000 (combined).

• Initial Death Benefit: $2.6M (assuming a 6% return).

• Projected Cash Value at Age 65: $3M (assuming a 6% return).

• Projected Death Benefit at Life Expectancy: $8.6M (assuming a 6% return).

The two 20-Pay VUL Policies on the Children were tailored for longer-term growth and substantial potential upside. Taking out policies on their young children capitalized on the low cost of insuring children of that age so that by the time they were adults, there would be a substantial tax-advantaged pool of wealth they could access tax-free. They could choose to use the funds to purchase their first house, start a business, or simply have the peace of mind that they were already protected when they themselves decided to have children of their own.

Policies on the Children

• Annual Premium: $10,000 (combined).

• Initial Death Benefit: $461K (assuming an 8% return).

• Projected Cash Value at Age 65: $8.8M (assuming an 8% return).

• Projected Death Benefit at Life Expectancy: $28M (assuming an 8% return).

Closing Thoughts

The Barry's policy portfolio demonstrates the power of a personalized financial strategy that can only be created by canvassing the marketplace across top carriers. The ability to quickly and easily illustrate the combined potential outcomes of the policy portfolio simplified the decision for the Barrys. By combining IUL and VUL policies, our clients were able to achieve financial benefits for themselves while laying the foundation for their children—even the next generation if appropriately managed. At Optifino, we pride ourselves on crafting personalized plans tailored to each client’s unique needs and goals. Whether you’re looking to protect your family’s future, build generational wealth, or explore market opportunities, we can help you find the optimal solution in minutes.

The financial illustrations and other statements within this report, as well as comments made by any individuals are not guaranteed and do not constitute a contract. The information and financial data included here are purely hypothetical and are not intended to predict or project future performance. Any illustration is intended solely for discussion purposes and is not representative of any actual investment results or performance. Actual investment results and performance will vary and are not guaranteed. This information is not intended to constitute any future performance figures and no specific securities are identified.

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

The Three Hidden Dangers of an Outdated Policy

1. Product Innovation Creates More Cost Effective Options For Goals

Did you know that costs for the same product can vary by up to 60% between different carriers? Carriers constantly adjust pricing, introduce new products, and improve policy structures. Yet, the majority of agents and advisors never proactively analyze existing policies to compare them with newer, more efficient options. This is not to blame advisors of any kind. Without the technology, the ability to quickly review a policy’s performance, and then compare it against other options in the market, was impossible. Agents and advisors are overwhelmed with data and knowledge, and the limited training for the limited product set no longer suffices.

Policyholders end up overpaying for their policy because they aren’t aware of newer products that could provide the same (or better) benefits for their goals more cost effectively. The ripple effect is such that fewer people believe the costs justify benefits. A study by LIMRA found nearly half of people who do not own life insurance say they think life insurance is too expensive, although 72% overestimate the costs and 30% of younger Americans are likely to think it is three times its actual cost. There are few other products on the market today that consumers underestimate its evolving versatility and overestimate the cost by such a wide margin. This is why we built the technology to automate policy reviews, helping advisors and policyholders ensure the policy is not outdated or costing them too much when better options are available.

2. Market and Interest Rate Fluctuations Impact Policy Performance

Permanent life insurance policies, particularly Whole Life and the Universal Life products, are heavily influenced by interest rates and market conditions. Many policyholders assume their policy will perform as projected when they first purchased it, but performance can deviate significantly from the projections over time. Regular reviews allow the policyholder to track performance against the projections over time, and stay ahead of any risks and, when needed, convert the policy into a more optimal one.

Universal life insurance policies, most commonly indexed against the S&P 500, have cap rates—usually between 8-10%. Where many policyholders run into trouble is when the market doesn’t grow. Typically the policy floor is 0%, meaning cash value is not lost, but the policyholder must pay into the cash value of the policy and not receive anything in return. Without an annual review, policyholders may unknowingly expose themselves to unnecessary risk, resulting in underfunded policies, unexpected premium increases, or even policy lapses.

Regular reviews allow policyholders to make adjustments. However, the performance analyses can be confusing, time-consuming, and full of jargon even for the most sophisticated investor. The fine print in every policy can create traps over time, policyholders and advisors alike may not prioritize this review frequently enough to stay ahead of those traps. Our technology automates the review in order to get ahead of any risks before they become problems, helping advisors get ahead of client care and potential optimizations.

3. The Policy Should Be Optimized To Life Stage, As Goals Evolve

A life insurance policy that was optimal five or ten years ago may no longer align with the policyholder’s current lifestage and financial goals. Major life events such as marriage, having children, buying a home, or retirement can significantly impact the amount and type of coverage needed. Depending on the amount of years the policyholder expects to work and accumulate their wealth, they might want to tailor for more potential upside by inviting more risk. Later in life, many policyholders convert into a policy with guaranteed growth and less risk—for a more protection-oriented portfolio. Oftentimes, achieving your financial goals through other investments, experiencing a large windfall, or benefiting from a large inheritance means people can shift to a more protection-oriented portfolio.

According to a Forbes survey, 63% of policyholders have never updated their life insurance coverage after a major life event. This means that many individuals are either underinsured or overinsured, leading to financial inefficiencies. The annual professional review ensures that your policy continues to support your evolving financial goals, retirement and estate planning strategies.

Who Should Review The Policy, and How Often?

At Optifino, we believe that an annual policy review is essential to elevating and securing your financial future. This is why empower both advisors and policyholders to review the policy and identify the best option. Our platform creates tech-powered, objective policy analysis, compares it against newer products, and identifies any opportunities for optimization—backed by our own team of experts. We are always adding new product innovations from the marketplace, and learning in real-time the best-in-class products for distinct goals and demographics. If a better solution exists, we help facilitate the transition seamlessly. If a policy is five years old or more, there are likely better products for the policyholder, and those policies should be prioritized for review.

Schedule a review with Optifino today and ensure your life insurance continues to work for you, not against you.

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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The Illusion of Wealth: The Statistics Don’t Lie

Despite being richer than previous generations at their age, Americans under 40 years old feel increasingly fragile about their financial standing due to the loud luxury economy that dominates our media ecosystem. A Wells Fargo study found that over 40% of Millennials believe it’s important to have visible signs of wealth—cars, luxury homes, designer clothing—compared to only 21% of Gen Xers and even fewer Boomers. Meanwhile, a CreditKarma study found that nearly 44% of Gen Z and 46% of Millennials obsess over the idea of being rich, and approximately the same percentage experience money dysmorphia.

Here’s the twist: Many experiencing money dysmorphia are actually better off than average person. Approximately 7% of those who report feeling financially insecure have over $100,000 in savings, and 23% have over $30,000—far above the U.S. median savings of $5,300.

The Financial Impact of Imitating Wealth

The rise of money dysmorphia has led to reckless financial behavior, with over 40% of Millennials relying on credit cards or loans to maintain an image of wealth and fund their lifestyles. Meanwhile, the U.S. credit card debt has hit a record $1.21 trillion, and nearly 30% of consumers admit to buying things they can’t afford to impress others.

The social pressure to appear wealthy aligns with the phenomenon of mimetic desire, a concept from philosopher René Girard. He argues that we don’t just want things—we want what others want. Social media intensifies this by putting desire at our fingertips, making wealth seem attainable if only we emulate the right influencers, buy the right items, and adopt the right lifestyle.

The Power of Social Media in Shaping Wealth Perceptions

In the past, we were influenced primarily by family, friends, and magazines. Now, social media has created a world where anyone can be a model of success, fueling unrealistic expectations. The curated lives of influencers make wealth seem more accessible than ever, but in reality, it’s often an illusion. Girard's theory suggests that material desires aren’t about the objects themselves but about the transformation they promise. When people buy luxury cars, it’s not just about transportation—it’s about status, self-worth, and the illusion of belonging to a higher class.

When people chase richness versus prioritizing building wealth, their poor financial habits transfer wealth from those trying to appear rich to those who are actually wealthy. As Warren Buffett put it, "The stock market is a device for transferring money from the impatient to the patient." The same holds true for consumerism—those who spend to impress often end up financially unstable, while those who invest quietly build real wealth.

Morgan Housel captures this sentiment perfectly: "Wealth is what you don’t see. Spending money to show people how much money you have is the fastest way to have less money."

Redefining Rich vs. Wealthy: The New Financial Divide

Being "rich" means having a high income or flashy possessions. Being "wealthy" means having financial security and sustainable wealth. However, the definition of wealth varies by generation. A recent Empower survey found that Gen Z believes financial success means earning $587,797 annually with a net worth of $9.47 million, while Boomers define it as just $99,874 in income and $1.05 million in net worth. In fact, pay that exceeds half a million dollars a year would put someone in the top 1% of earners in 32 out of 50 states. In order to be in the top 20% of income, you would need to bring in an income of above $130,500 a year, while the top 1% earns above $819,324. The average American family has a net worth of $1.063 million, but surveys show most Americans believe being wealthy requires at least $2.5 million—a number that has steadily risen over the years.

Here's the typical American's net worth by age, according to Federal Reserve data:

These differing opinions emphasize the influence of our current media ecosystem in driving perceptions of wealth, with the generations that are much more socially-native have more money dysmorphia. The truth is, riches will never turn into wealth as long as perceptions of wealth are skewed. The social models that influence our financial desires are often designed to keep us feeling behind, encouraging spending rather than investing. True wealth comes from sustainable cash flow, smart investing, and the ability to resist the illusion of instant success.

The Path Forward: Shifting from Rich to Wealthy

To escape money dysmorphia and build lasting wealth, financial success must be redefined. Too many fall for what we call the "Numbers Myth" – the belief that prosperity can be reduced to numerical targets like retirement savings or net worth. We recently worked with a tech executive who, despite having a paid-off mansion and $5 million in retirement accounts, lived in constant anxiety about losing it all. Instead of chasing a number, focus on cash flow, long-term investments, and economic impact. Sustainable wealth is about security, freedom, and living on your own terms—not proving something to others.

People with modest means can feel abundantly wealthy because they've built sustainable value-creation systems, while multi-millionaires live in fear of losing everything. No matter where you are financially, the key is breaking free from external validation and redefining wealth on your own terms. The wealthiest people aren’t the ones with the most visible luxury; they’re the ones who have mastered the ability to resist short-term gratification for long-term prosperity.

Comment below any rules you live by to stay the course on your wealth accumulation journey.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

Below I break down real life lessons applied by our most wealthy clients that helped them reach where they are today, and we outline how much savings is needed to reach $2M when you start at different life stages—emphasizing how much harder it becomes to reach this goal the longer you wait.

Your Twenties: The Foundation for Wealth

When most of us think of our twenties, we think about the newfound freedom we experience from becoming financially independent from our parents and making our own decisions. All of a sudden we have income, usually a very modest one, and we want to spend it on fun, vacations, and shiny objects. We are bombarded with noise: promise of crypto alt coins pumps, tech startup dreams, and influencer lifestyles. However, if you are able to avoid procrastination for saving, control your desire for instant gratification, sort through the noise, and act like the future begins now, then you will create a foundation that sets you up for life. If you learn to budget and prioritizing savings, over lifestyle inflation, then you will already be ahead of most of your peers.

The average income for a 25-year-old is about $50,000 per year. Whether or not your income is substantially higher than this at this age, it’s imperative that you live in a modest apartment and drive a reliable, used car instead of seeking luxury and a new car. If you invest 20%, or $10,000 annually, assuming an 8% return, by the time you are 70, that money will have grown to $4.1 million due to compounding. If you delay saving until age 30, you now need to save 25% of your income annually to hit the same $2 million goal by age 70.

Your Thirties: The Balancing Act

When we enter our thirties, the financial decisions start to carry more weight and we are asked to become even more attuned to our goals. We see our friends start to get engaged, have children, and buy houses, while others are nowhere close to reaching those milestones. The variability of experiences in your thirties is dramatic, but the most important thing to note is to never compare your timeline to someone else’s timeline. Which, truthfully, is one of the most difficult mental tasks to accomplish, especially in our media ecosystem. The pressure from social media has made us go from keeping up with the Jones to keeping up with the Kardashians. Wealth feels more attainable and pervasive than ever.

The reality is that most of us in our thirties have substantially increased our income and spending power since our twenties, making it more difficult to not justify buying a bigger home, upgrading your car, or spending more in general. The more that we are able to our expenses and spending flat as we earn more, the more we can invest in assets that compound—helping us start to create separation from the pack with our quiet wealth. At age 35, the average income rises to about $70,000. If you invest 20% ($14,000 annually), assuming an 8% return, by age 70, this savings will grow to about $1.5 million—falling short of the $2 million goal, even if still a substantial amount.

Your Forties: The Make-or-Break Decade

Our forties come with substantial lifestyle shifts and even some upgrades, but it’s important to not splash cash around like you have already accomplished your goals. Career demands and growth means you are still in the grind. The lifestyle creep that comes with a higher salary and a growing net worth can encourage many to abandon some wealth building principles. While this might be the time to upgrade from your starter home to a larger, more comfortable home to fit your growing family, resist the temptation to upgrade to your dream home just yet. Many of your peers will seem wealthier because of what you see them spending and doing, but it is important to continue prioritizing investments and embodying the idea that wealth is not what you see.

The average salary for a 45-year-old is around $90,000. If you save 20% ($18,000 per year), your investments will only grow to $900,000 by age 70—not enough to retire comfortably. If you are starting your savings journey now, you’ll need to save 35% of your income annually to reach $2 million by age 70. Saving that much during this decade is especially challenging given increasing family responsibilities and other financial commitments. While there is still enough time left in your work life to take a few high-risk investments, do not risk this at the cost of your future. Are you starting to see how painful it is to wait if you are hoping for a carefree retirement?

Your Fifties & Sixties: The Hard Work Pays Off

The decades where you start to reap the rewards from wise choices made earlier in life. If you are in your fifties and sixties and lagging behind on your financial goals, then urgency really starts to kick in. If you have children, it is likely that they are graduating college and creating their own newfound financial independence, providing the opportunity for you to reduce unnecessary expenses and downsize where possible. If you never had children, then it’s quite likely you need to reduce as many expenses or downsize since you never scaled as much as parents. The important thing to continue to practice, given you likely only have two decades left of your career, is maximizing contributions to retirement accounts and tax-advantaged investments.

It’s important to avoid high-risk investments to make up for lost time during these decades. Do not let the emotions of your life stage impact the sobriety of your financial decisions and lead you to financial ruin just for the dream of living the most lavish and comfortable retirement. If you are waiting until this late in your life to save the amount you need for retirement, then it is time you reset your expectations of what retirement will look like to something more practical. At age 55, to hit $2 million, you now need to save nearly 70% of your income—a near-impossible feat for most people.

If you are on track to achieve your financial goals, then this is the moment in which you want to start transitioning to a protection-oriented strategy to safeguard your savings—shifting out of too much risk. Your financial strategy should start planning for long-term care expenses and ensuring estate planning is in place. Now should be the time where healthy financial practices start to pay the most dividends, as overall expenses start to decrease, allowing you to enjoy a bit more luxury. Those that consistently practice good financial behaviors will benefit from the fruits of their physical and emotional labor.

The Best Time to Start Is Now

Remember, time in the market beats trying to time the market. It’s easy to get carried away with being very risky early in your life as you see people in your network experiencing huge windfalls, but even modest investments made early grow exponentially over decades. Take the risks as you see fit, so long as those don’t get in the way of your savings goals, and slowly shift out of risk later in your life. Also, do not get frustrated with yourself: you don’t need to save perfectly every year—just stay in the game. Focus on increasing savings as income grows rather than making up for lost time in one go.

No matter where you are in your financial journey, the most important thing is to start today. Wealth-building is not about making perfect choices—it’s about making smart, consistent decisions over time. If you work hard, it’s easy to get lucky once, but what is difficult is to continue building on your wealth with healthy financial practices and not get carried away with your own success. If you’re in your twenties, you have the advantage of time. If you’re in your forties or beyond, don’t be discouraged; adjusting your savings rate and making smarter financial choices can still set you up for a comfortable future.

Start now. Stay consistent. Let compounding work for you.

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

1. Live Below Your Means

Maximize the delta between income and expenses for wealth accumulation. While seemingly obvious, this is perhaps the most difficult rule to actualize because of the pressure to keep up appearances. Choosing modest housing, reliable cars, conscious shopping for fashion, and limiting meals eaten at restaurants are the most effective ways to shift from loud luxury to quiet wealth. Living below your means doesn’t mean deprivation; it’s about prioritizing long-term financial freedom over short-term indulgences.

A recent Wells Fargo study showed how Millennials are obsessed with looking rich, with more than 40% believing it’s important to have visible signs of wealth, whether it be purchasing a fancy car, clothing, or place to live—compared to just 21% of Gen Xers, 8% of baby boomers, and 7% of the silent generation. Currently more than 40% of Millennials relying on credit cards or loans to fund their lifestyle, revealing the pressure that each new generation faces as they navigate the mimetic models that exist today. These mimetic models as coined by Rene Girard, or forces that shape the things we desire, feel closer than ever due to the parasocial relationships we now all experience across social media. Our mimetic desires mislead us into believing that if we fake it till we make it, we will be accepted by the social class above us and subsequently earn more.

One helpful rule established in Rich Dad, Poor Dad by Robert Kiyosaki is to only buy luxury goods when you can afford them with your passive income alone. When you live below your means, you have more money to invest in compounding assets. For example, Sarah, a graphic designer, chose to buy a used car and live with a roommate, even after earning a six-figure salary. By redirecting the money she saved into investments, Sarah’s portfolio grew to $500,000 within a decade. Compare this to Jack, who financed a luxury car and rented an upscale apartment. Jack earned more but saved less, delaying his financial independence by years. Modest choices compound over time, leading to greater financial freedom.

2. Save Aggressively & Early

Building the habit of saving as early as possible is crucial. The earlier you start, the more powerful compound interest becomes. Even small contributions can snowball into significant wealth over decades. Starting at age 25, saving just $300 per month with an 8% annual return grows to over $1 million by age 65. Waiting until 35 to start reduces that total by half. That being said, it's never too late to begin. The next best time to begin is today.

Do not let late starts get in the way of strong finishes. Just like with exercise and healthy eating, time and consistency are your strongest allies when it comes to saving. The earlier you start, the smaller percentage of your income you are able to set aside to achieve the same level of wealth as somebody who starts later. Establish a percentage of your income—start with at least 20% if possible—that you can comfortably set aside and then increase that number proportionally to any income increase over your lifetime. Avoid letting your expenses rise with your income, knowing that the amounts needed to retire continues to increase.

3. Ignore the Noise

Every generation faces distractions, pressures, and FOMO (fear of missing out). This generation’s distraction can be found in cryptocurrency speculation. Even if there is value to be found in a few currencies, the amount of overnight millionaires created from getting lucky on speculative alt coins—take Dogecoin and the recent $Trump coin for example—is causing too many people to chase the bag. The reality is over 80% of day traders lose money, according to a study by the National Bureau of Economic Research. Big money continues to develop more sophisticated algorithms to drive their investments, while the individual consumer is left holding the bag.

Many fall prey to sensationalized trends rather than sticking to a disciplined investment strategy. Dollar cost averaging in a balanced portfolio is the best way to build wealth in the long-term, even if it is the most boring. For every overnight millionaire, there are thousands of people who lost money chasing the hype. If you feel so strongly that the noise is real, ensure you are only investing what you are willing to lose and that it is in addition to good financial practices—not instead of it. Think in increments of five and ten years, rather than fixating on trends, headlines, earning reports and quarterly changes.

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4. Wealth Is What You Don’t See

Over 90% of millionaires attribute their wealth to regular investments in unseen assets, like equities and property. True wealth isn’t in flashy cars or designer clothes but in assets that compound quietly over time—stocks, real estate, and retirement accounts. In the Psychology of Money, Morgan Housel explains how nobody ever cares about the person driving the luxury car or dressing in designer clothes, they only imagine themselves in it. Don’t get distracted by looking rich and stay focused on investing in unseen wealth.

The decisions you make today should align with the lifestyle you want tomorrow. Permanent life insurance exemplifies this idea of stealth wealth: an asset with tax-advantaged wealth benefits, with a minimum of five to ten year time horizons before the compounding effects really take effect, that can be accessed during your lifetime or leveraged for estate planning purposes. Sacrificing short-term pleasures can pave the way for lasting financial security. Studies show that 39% of Americans regret not saving more for retirement, often citing unnecessary spending as a barrier. Remember, wealth grows quietly and often goes unnoticed until it’s substantial.

Key Takeaway

Wealth is a function of time, and time amplifies your financial decisions, so stay the course. The longer you stay in the game, the greater your rewards. Consistent contributions and patience allow compounding to work its magic. Albert Einstein reportedly called compound interest the “eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it.” Even modest annual returns can double your money every 7-10 years. Wealth-building is boring—and that’s why it works. The small, consistent steps yield the most reliable results. The next step after understanding and practicing these fundamentals is putting real numbers behind the goals you hope to achieve. In our next blog, we will explore the difference between being rich and wealth, and look at what it takes to achieve different levels of wealth.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Long-term care insurance helps you pay for the cost of long-term care services, without depleting your savings quickly, impacting retirement plans and inheritance. Long Term Care (LTC) refers to a range of services that support people who can no longer perform everyday activities independently. These activities, known as Activities of Daily Living (ADLs), include bathing, dressing, eating, transferring (moving from bed to chair), toileting, and maintaining continence. However, the LTC market has changed significantly since inception, as the market was severely mispriced with people living way longer than anticipated, causing the premiums for long term care insurance to increase. More than 1 in 4 (27%) consumers say that a standalone long-term care insurance policy is too expensive.

Many people are turning to more multi purpose solutions like Life Insurance with LTC riders, or "Hybrids", versus the traditional "use it or lose it" modeled products. A Long Term Care Rider is an add-on feature to a life insurance policy that allows policyholders to access their death benefit early should they require long-term care. If you never need long-term care, your beneficiaries still receive the death benefit. It is generally less expensive than standalone LTC insurance and the premiums are guaranteed to not increase. The underwriting process compared to standalone LTC policies tends to be simpler. Many major life insurance carriers offer LTC riders as part of their permanent life insurance products, including Lincoln Financial Group, John Hancock, Pacific Life, and Nationwide.

Why the LTC shifted from traditional LTC standalone to more hybrid offerings

Several large insurance companies have left the LTC market over the past few decades. Companies—like Prudential, MetLife, and Genworth—either discontinued offering new LTC policies or sold their LTC businesses. There are several reasons companies like these left the market:

1. Rising Costs and Unpredictability

Long-term care insurance is expensive to provide and hard to price accurately. It’s difficult to predict how long policyholders will live and the associated costs of what they will need. A helpful rule of thumb to consider in terms of costs is that 2x HIPPA covers approximately $840 a day in costs. An increasing number of high-cost claims deters some companies from offering this product. With people living longer due to medical advancements, insurers often underestimated the number of claims, leading to financial losses.

2. High Premiums and Affordability

LTC insurance premiums have increased substantially over the years, making it less affordable for many consumers. Insurers have raised premiums in response to rising healthcare costs, longer lifespans, and underestimations of the number of policyholders making claims. This affordability issue has led many potential buyers to forgo purchasing LTC insurance, further shrinking the customer base.

3. Regulatory and Legal Issues

There has been a significant increase in regulatory scrutiny and legal challenges in the LTC insurance market. For example, insurers have been criticized for raising premiums on existing policyholders and for unclear policy terms. In response, some states have implemented stricter regulations, which can make it harder for insurers to balance risk and profitability.

The Best Time To Prepare Is Today

Many clients overlook the need for LTC until it’s too late, putting stress on families who may be unprepared to bear these costs. According to the U.S. Department of Health and Human Services, approximately 70% of individuals aged 65 or older will require some form of LTC in their lifetimes. The average duration of LTC is around three years, with 20% needing it for more than five years. Long term care costs can vary significantly. In the United States, the median annual cost of a private room in a nursing home was around $108,000 in 2023; in-home care services averaged about $60,000 annually for 44 hours of care per week. It’s important to consider getting LTC early, while still in good health, to get the most favorable terms.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Historical Performance Through Market Downturns

The resilience of Whole Life policies becomes particularly evident when examining their performance during major economic downturns:

• During the 1973-1975 recession, when the S&P 500 dropped by 48%, Northwestern Mutual maintained a dividend interest rate above 7%.

• In the early 1980s recession, while interest rates soared and markets struggled, major mutual carriers like MassMutual and Guardian Life maintained dividend rates between 10-13%, outperforming many traditional investments.

• Through the 2008 financial crisis, when the S&P 500 plunged 37%, the average dividend interest rates from top mutual carriers remained stable, hovering between 6-7%.

• Even during the COVID-19 market crash of 2020, leading mutual carriers maintained dividend interest rates around 5%, demonstrating remarkable stability when other investments faced significant volatility.

The Dividend Advantage

As evidenced by historical data, the dividend interest rates for three of the top insurance carriers—Northwestern Mutual, MassMutual, and Guardian—have consistently exceeded corporate bond interest rates since 1980. This means that if you seek protection from market volatility, then investing part of your financial portfolio in a Whole Life policy under a top mutual carrier could be a prudent strategy.

Consider these compelling statistics:

• MassMutual has paid dividends every year since 1869, including through 30 recessions.

• Northwestern Mutual has maintained a dividend payment record spanning over 150 years.

• Guardian Life has paid dividends for over 130 consecutive years.

Moreover, the cash value of a Whole Life policy can be accessed via tax-free loans. These tax-free loans, often at more favorable terms than the bank, can then be utilized as additional investment liquidity or supplemental tax-free income if market volatility, and the need to time the market, is hurting your chances at retirement.

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A Multi-Purpose Financial Tool

Essentially, Whole Life allows the policyholder to insulate themselves against market volatility, ensuring a guaranteed return while working towards multiple goals at once: tax-advantaged growth, protection from market swings and moves made by politicians, retirement planning, and estate planning to name a few.

A whole life policy held under one of the top mutuals will often pay dividends to the policyholder higher than the guarantee because of their diversified investment strategy. They're invested in bonds. They're invested in the stock market. They're put into all kinds of alternative investments with managers worldwide. In turn, this creates the opportunity for the policyholder to use their policy while they are still alive—one of the most misunderstood traits of permanent life insurance.

Beyond Traditional Retirement Accounts

Times of economic uncertainty are stressful for anybody building wealth, or with significant amounts of wealth, particularly if you're keeping an eye on the performance of your 401(k) or Roth IRA. The additional advantage of permanent life insurance, in comparison with a 401(k) or Roth IRA, is that there are no contribution limits or age-restrictions related to investing money in a policy.

These are just a few reasons why permanent life insurance is so powerful, and why people perceive PLI to be too expensive, because they do not realize it works towards multiple goals. Whether Whole Life is the right policy for you is entirely dependent on your goals and life stage, and we can help you design the most holistic portfolio for your goals by tapping into the full spectrum of permanent life insurance.

The Bottom Line

In an era where market volatility seems to be the new normal, Whole Life insurance stands out as a financial tool that offers both stability and flexibility. Its historical performance through various economic cycles demonstrates its value as a cornerstone of a well-diversified financial strategy.

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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The Case Study

We recently met with a 60-year-old client with multiple convertible term policies nearing their conversion dates. The client had previously consulted a broker who recommended converting all policies, without considering the broader marketplace nor the client's present health status. Unfortunately, most agents and advisors lack the tools to properly compare the entire marketplace—the reason our platform is so powerful—so this is the conventional approach and it has negatively impacted conventional wisdom.

The Conventional Approach

The previous broker's strategy involved:

1. Assuming the client's health status remained unchanged

2. Converting policies to preserve the original preferred-plus rating

3. Failing to compare options across the top carriers

This approach led to a significant policy conversion, with a $10 million face value and an annual premium of approximately $200,000.

The Problem with Conventional Wisdom

Several issues arose from this conventional approach:

1. The chosen carrier specialized in accumulation-type policies rather than protection-focused policies.

2. The client's wealth status dictated a need for protection-focused coverage.

3. The broker failed to conduct a thorough discovery process or market comparison.

The Optifino Approach: Always Canvas the Market

At Optifino, we believe in thoroughly evaluating all options before making a decision, which is why we built the platform to be able to do so in minutes. Our philosophy involves:

1. Canvassing the entire marketplace for each policy decision

2. Utilizing our advanced comparison engine for efficient market analysis

3. Considering the client's current health status and financial goals

4. Showcasing the options and potential outcomes in an easy visualization

Our Findings

Upon analyzing the market, we discovered:

1. Protection policies from other carriers offered significantly higher death benefits (for the same premium) or lower premiums (for the same death benefit).

2. The client could potentially save approximately 40% on premiums (paying $120,000 annually instead of $200,000).

3. Even if the client's health status had dropped to standard, they could still save 30% on premiums.

Key Takeaways

1. Don't assume conversion is always the best option: While converting a policy can preserve a favorable health rating, it may not result in the most cost-effective solution.

2. Regularly reassess your insurance needs: As your financial situation changes, so should your insurance strategy that is why we are setting an industry gold-standard of annual reviews.

3. Consider the ever-evolving marketplace: Insurance carriers are always introducing new product innovations, and new products may provide better value than converting an existing policy.

4. Update your health status: A current health assessment can open up new, potentially more favorable options.

5. Work with an advisor who compares the entire market: A thorough market analysis can reveal significant savings opportunities.

Closing Thoughts

By challenging conventional wisdom and taking a data-driven approach to policy decisions, policyholders can potentially save millions of dollars over the life of their insurance coverage. While this case study represents a client with substantial wealth and a larger budget than most of us, the lesson applies no matter your wealth level. Always consider canvassing the market and updating your health status before automatically converting a term policy, even if it is just for the peace of mind of knowing you did your due diligence.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

Before we dive into the potential ways to maximize the cash value in your policy, let’s first begin by understanding what it is and how it works. 

What is cash value life insurance? 

Cash value life insurance represents a spectrum of different policy types (i.e. Whole Life, Variable Universal Life, and Indexed Universal Life) that not only provides a death benefit to beneficiaries but also accumulates a cash value over time, accessible in the policyholder’s lifetime if desired. The policyholder benefits from income-tax-free access to the cash value via policy loans at competitive rates, while the cash value continues to grow (so long as it’s a non-direct recognition policy as mentioned above). The death benefit is also inherited income tax free, and if there is any part of the loan that remains unpaid, it comes out of the death benefit paid out. For somebody unfamiliar with the concept, the easiest way to simplify the concept is that cash value life insurance combines a long-term savings account with a life insurance policy, making your money work harder to achieve multiple goals. 

How does cash value life insurance work? 

When you pay your policy premium, the cost of insurance (mortality charges, policy administration fees, etc.) is subtracted and the remaining part goes towards building the cash value of the policy. The cash value acts as a forced savings vehicle that can accumulate capital gains tax-deferred over time, creating a liquidity pool that can be used to make investments and build wealth. Policies can be tailored to maximize cash value growth more quickly.  Depending on the policy type and design, the cash value may grow more quickly by tapping into additional risk and enabling more control over where funds are invested (i.e. ETFs, Index Funds, brokerage accounts, etc.). Policyholders are typically able to borrow up to 90% of the value, and often at better terms than the bank. Some policies may have specific riders or terms that allow the cash value to be added to the death benefit, but these are less common and usually require specific arrangements and potentially higher premiums. However, if policyholders fail to manage the policy correctly, they could lose coverage or face tax implications, which is why we prioritize aftercare and provide annual reviews for our clients.

What is the benefit of the cash value in your life insurance policy during your lifetime?

When used appropriately and strategically, the strategy of creating a Family Bank with a cash-value-optimized policy creates a powerful opportunity to build wealth and leave a legacy. We see too many “financial influencers” encourage irresponsible uses of this permanent life insurance feature, especially for those who might not have the income, wealth, or be in the ideal life stage to warrant doing so. While it might make sense for some to leverage the cash value in the more speculative manner that infinity banking proponents suggest, here are five practical ways to leverage the cash value in your lifetime:

1. Retirement Planning: EY researchers estimate that by 2030, there will be a $240 trillion retirement savings gap and a $160 trillion protection gap. The retirement savings gap only continues to grow, as the efficacy of the 401(k) as a primary retirement vehicle is increasingly questioned. The cash value in a policy can provide supplemental retirement income, specifically a tax-free source of funds that does not impact Social Security benefits and is not restricted by contribution limits like traditional tax deferred accounts. 

2. Emergency Expenses: Accessing the cash value can provide quick funds, without having to liquidate other investments, to cover unexpected expenses such as medical bills—especially with the increasing rate of long-term disability and healthcare. WSJ recently reported how cancer is capsizing Americans’ finances—the result of higher drug prices and rising-out-of-pocket costs creating increasing economic strain. Even health insurance is not always sufficient, as 98% of cancer patients who went into debt to cover their costs were insured at the time debt was incurred. Moreover, health outcomes are worsening, with nearly 70% of 65-year olds will need some form of long-term care in their lifetimes, according to the U.S. Department of Health and Human Services.

3. Children’s College Fund: For those who want to leverage the cash value for their next generation, there is always the option of using it to cover higher education. Covering rising tuition and other educational expenses for children is becoming a larger burden, especially as wages struggle to keep up with the inflation of higher education. Parents with enough residual income to commit to savings could even take out a policy on each child, soon after they are born, and the cash value in the policy could grow to cover a portion (or the entirety) of that child’s college tuition and extra costs. This can be an alternative to student loans, which often have higher interest rates.

4. Real Estate Investments: For entrepreneurial real estate developers and those pursuing the expansion of their real estate portfolio, the ability to take out tax-free loans against the cash value of your policy presents a powerful tool for creating more liquidity. Investing in a rental property or other real estate opportunities is one of the most popular ways people maximize the cash value given its ability to generate rental income and potential property value appreciation—helping quickly pay off the loan and start the process all over again.

5. Starting a Business: The same manner in which the loan against the cash value can be used to invest in real estate, it can also be utilized to fund a new business venture. The cash value can serve as seed money, without the need for a traditional bank loan or outside investor, which might be harder to obtain. Perhaps you only want to work for another five to ten years, until you save enough to quit and take a chance on opening the bakery of your dreams. Or maybe a bakery is too much of a morning-person passion for you, and you are working towards opening a bar in the theme of “Dogs Playing Poker”. Side note: apologies if we just leaked your secret for the world to take; we’d be happy to help you brainstorm another, better one. 

Ways to maximize the cash value in your policy

The first way to maximize the cash value is to start early, both because life is unpredictable and you never know when you need it and because insurance costs are lower the younger you are. The only way to ensure you have it when you need it is to acquire it before you do, but if you want to become your own banker, it’s important that you have enough liquidity. The below analysis examines death benefit for a preferred plus male at forty, fifty and sixty years old, which comes from our previous analysis of VUL.  

The second way to maximize the cash value is ensure you only access it for once-in-a-lifetime opportunities. Since the loan against the cash value is not subject to income tax—unlike 401(k)s, IRAs, or traditional brokerage accounts—it is an effective vehicle for creating supplemental income during retirement. According to a new report from Northwestern Mutual, Americans now believe they need $1.46 million to retire comfortably, yet Gen X, the alpha tester for the 401(k) retirement system, is reporting gloomy results pertaining to its effectiveness. According to the newly released Goldman Sachs Retirement Survey, nearly half of Gen Xers say their retirement savings are behind schedule, having saved only an average of $109,600. With Social Security benefits set to decline 24% by 2033 without policy revisions, along with increasing longevity risk and healthcare costs, the level of financial support needed to retire comfortably is increasing. 

The third way to maximize the value you get as a policyholder with cash value life insurance is to align with the rest of your financial portfolio. Whole Life is beneficial if you want diversification away from the market and guarantees, with a tradeoff of lower potential growth. Whereas UL policies allow you to earn cash value based on the market’s performance in different manners. 

If you do access the cash value early, a good rule of thumb is that the cash flow from your investment should pay back your policy loan and it should all be done on a regular schedule. However, before making any of these kinds of decisions, our Optifino experts can help you understand the time horizons and considerations that go into when you want to access the cash value—both during the policy design process and as a part of our ongoing aftercare. 

Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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That's why it's crucial to be able to evaluate the trustworthiness and expertise of the agent providing the policy recommendation(s). Because we believe tailored permanent life insurance to be one of the most powerful and resilient assets to own before any other, we aim to equip everybody with the knowledge of the right questions to ask and why—whether you work with us or not. We will explore five essential questions you should ask a life insurance agent when considering whether to work with them. These questions are designed to reveal the agent's true intentions, ensure they have your best interests at heart, and help you make a well-informed decision about your life insurance needs. 

1. How do you determine which type of life insurance policy is best for your client’s unique financial situation and goals?

We need to uncover how they tailor policies, specifically if their process is entirely analog or whether they use any technology. This question forces the agent to explain their decision-making process and whether they tailor their recommendations based on individual needs—rather than promoting one-size-fits-all solutions. Many agents favor Whole Life policies because of the guaranteed death benefit and the influence of Nelson Nash—a finance expert and follower of the Austrian school of economics who coined the Infinite Banking Concept (IBC) in the 1980s. During the ZIRP era of the 2010s, the many agents showed a bias towards IUL policy, which left many policyholders too exposed to the market (especially as their goals evolved and they sought financial protection) or with a likelihood of lapsing (especially since it had been getting lower cap rates). Ultimately, we need to ensure the agent is considering the client’s broader financial picture and future needs, rather than just focusing on the sale.

2. What are the potential downsides or risks associated with the life insurance policy you’re recommending?

This question is designed to uncover agent transparency or lack thereof. Across the policy spectrum, there are tradeoffs with every type of permanent life insurance product since they are designed to cater to specific goals, life stages, and risk tolerance. If an agent believes there are no drawbacks in the policy, then they are either trying to push a sale that does not align with your goals or they are misinformed and lack the proper education to be making said recommendation. This is what led to many of the IUL recommendations mentioned before, since many agents assumed the market would always go up and did not account for market volatility or the changing cap rates written in the fine print of those policies. A good measure for their honesty is if they can explain, in layman’s terms, why other policies were not recommended.

3. Can you provide a comparison of the policy you’re recommending with other policy types or similar policies from other carriers?

We want to identify whether they are selling one product or one carrier because they are biased towards one product or carrier, or if they are truly leaning into the spectrum of life insurance products based on a client’s goals. This question challenges the agent to justify their recommendation with a broader market perspective, demonstrating their commitment to finding the best fit for the client. When nearly 50% of the agent salesforce is captive, you must ensure the agent is disclosing any kind of incentives or preferential treatment the agent receives from specific carriers. Premiums can vary as much as 60% for the same product across carriers, so if the agent is not independent, policyholders risk overpaying and even working against their goals. This question aims to uncover potential conflicts of interest or shortcuts taken to lead to a faster recommendation at the expense of the client. 

4. How often will you review my policy to ensure it continues to meet my needs, and what does that review process look like?

The goal here is to establish the standard of aftercare they provide to their clients. Aftercare is largely absent from the industry, with many agents never looking at the performance of the policy after the policy is taken out. With an aging workforce, more policies are becoming orphaned—meaning the agent is no longer in the agent workforce—as older agents retire. Estimates are that between 40 and 70% of life insurance policies are orphaned and between 20% to 40% percent of agents are within 10 years of retiring or selling their practices (LIMRA-McKinsey Financial Advisor Survey), meaning all current policyholders would benefit from having their policy professionally reviewed. According to JD Power, overall policyholder satisfaction deteriorates the longer they hold a policy, specifically at the 10-year and 20-year mark, since goals evolve and policyholders are unsure it’s still contributing to their goals. We use both our proprietary technology and Wealth Architect experts to professionally review our client’s policies every year, ensuring it is always aligned with their goals and that the policy is never orphaned.  

5. What is your experience and track record in helping clients achieve their financial and insurance goals? Can you provide references or testimonials?

Given the fact that most licensed agents spend less than a year in the industry, there are many agents without the experience or track record to tailor the policy towards your goals. While their experience and track record alone should not be enough to discredit the recommendation, when taken in tandem with the other questions, this is the cherry on top. This question helps a potential client gauge the credibility of the recommendation, especially if the recommendation is made without the likes of a policy tailoring platform like Optifino. If the agent is more novice and unable to provide the testimonials, they should have references from those who trained them—certifying their knowledge and education. Consider the networks and communities that more novice agents operate in, and judge for yourself if they truly love this Swiss army knife of an asset or if they’re merely trying to convert a sale. 

We built our platform to address all of the questions above and create renewed understanding and excitement around an asset that is the foundation of a holistic financial strategy—a versatile asset that can act like a supercharged savings account. Whether you want to work with us or not, we simply hope to equip you with the questions to approach a conversation with an agent with confidence. Choosing a life insurance policy isn't just about finding the lowest premium or the most attractive benefits; it's about finding an agent who genuinely understands your needs and is committed to helping you achieve your goals—from spending your waning days fishing eight ours a day to creating a college fund for your newborn. A good life insurance agent will welcome these questions and provide transparent, thoughtful answers that reflect their dedication to your well-being. We love this asset class and we want you to know what you’re buying. Don’t settle for anything less than you deserve. Your future depends on it.

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Life insurance technology and life insurance are provided by Optifino, Inc. (DBA Optifino Insurance Services in New York) (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website has been developed by Optifino, Inc and is for informational purposes only. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Products and specific product features may not be available in all states, and other limitations or restrictions may apply. Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

The life insurance industry, historically characterized by its complexity, is facing a new era of regulatory scrutiny aimed at enhancing transparency, accountability, and the overall best interest of the consumer. This shift is largely driven by the SEC's Regulation Best Interest (Reg BI) and the Investment Adviser (IA) fiduciary standard, as well as increased attention from FINRA on how financial products, including life insurance policies, are recommended by agents and advisors. FINRA and the SEC have stepped up their enforcement efforts in recent days especially so that activity should increasingly lead to behavior that looks more like the kind of behavior long demanded of fiduciaries. However, meeting new fiduciary standards requires both time and technology, yet when it comes to the life insurance industry, there’s very little of both. Fortunately, innovative new technologies are helping agents and advisors save time and build more tailored life insurance portfolios based on goals and an investment profile, meeting and surpassing compliance standards that are impossible for any human to navigate alone. Let's delve deeper into the specifics of these regulatory changes and explore their implications for the industry, supplemented by insights from our experts on the front lines. 

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The Shift Towards Greater Transparency and Consumer Protection with Reg BI

Introduced by the SEC, Reg BI establishes a clear standard that broker-dealers and their representatives must act in the best interest of their clients, avoiding conflicts of interest. Agents and advisors must be able to show that they considered reasonably available alternatives to the products that were actually recommended, including the ability to document that these alternatives were considered. Recommendations cannot be pegged to individual products or house products under the new regime. This regulation is a significant departure from the previous suitability standard, requiring a more rigorous process to ensure that recommendations, including those related to life insurance products, align with the client's financial needs and objectives.

Meeting new Reg BI standards are drawn from three key fiduciary principles. The first requires advisors, agents and other financial professionals to understand the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. New standards establish an ongoing monitoring obligation, requiring continued analysis after purchase of the investment and over the course of the relationship. The second standard requires that recommendations or advice must be based on a reasonable understanding of the specific retail investor’s investment profile. The third is based on the understanding of the first two elements, having a reasonable basis to conclude that the recommendation or advice provided is in the retail investor’s best interest.

Regulators will expect firms to have a process for reasonably evaluating available alternatives. The broker standard of conduct implemented in 2020 prohibits brokers from putting their revenue interests ahead of their customers’ interests in investment returns—a practice that drove some irresponsible sales of IUL policies in the previous zero-interest rate environment. New technology innovations in data and analytics can help create the process of evaluating available alternatives and guaranteeing objectivity in life insurance recommendations, streamlining tasks that otherwise would be extremely difficult to do manually, and to ensure consistency across the representatives within a firm. They also allow you to integrate the client’s investment profile into the algorithm to design for more objective recommendations.

Recent Regulatory Examples Signaling Increasing Scrutiny

Although Reg BI was introduced in 2020, FINRA recently announced that Regulation Best Interest will continue to be a “priority area” this year, particularly cases involving failures to disclose certain conflicts. The problem is the workload required before brokerages and advisors establish a standard of care, which has meant many efforts to date remain perfunctory. Firms and practices continue to explore their options as they also look to understand the standard of care that will actually be prosecuted, with the latest iteration of a Reg BI study shows brokers are falling short on offering customers reasonably available alternatives to recommendations and mitigating conflicts of interest. 

The study also found that many brokers are still incentivizing their registered representatives to sell complex products—ignoring lower-cost and lower-risk investments when recommending. Point-of-sale disclosures continue to be minimal at best, showing how difficult it is for many brokers to move beyond a product-sales mindset to a more holistic approach. Recently FINRA suspended a broker for 15 months for recommending unsuitable trades in four accounts held by three customers, whose trading resulted in high turnover rates and cost-to-equity ratios. In another case, LPLA was penalized for securities violations when the company failed to properly supervise transactions and recommendations, sending out inaccurate information to its customers. Last year, FINRA imposed $185,000 in financial penalties on five brokerages for compliance failures. The tougher standards also extend to the regulator’s new expungement guidelines, with a FINRA arbitration panel recently denying a broker’s request to clear an old customer complaint. 

Impact on the Life Insurance Industry & How Optifino Helps

The implications of these regulatory changes for the life insurance industry are profound and multifaceted, especially since (until Optifino) there has been no tool that evaluates reasonable alternatives, establishes objectivity in recommendations, integrates the client investment profile into the recommendation, and understands the potential risks and outcomes of any policy. However, new technological advances in data processing and analytics—specifically when it comes to AI—empowers agents and advisors to undertake comprehensive analysis of available life insurance products. No human alone is able to weigh all the factors involved with making a recommendation, such as cost, coverage, and risks to ascertain which products truly serve the client's best interest. Optifino enables the agent and advisor to do so, which is why we aim to become the standard for objective and holistic recommendations in high-end permanent life insurance.

Our advanced algorithm integrates the client investment profile to create a comprehensive analysis of the marketplace, and then visualizes the potential risks and outcomes of the different products best suited for their investment profile. Additionally, our platform makes it easy for advisors and agents to meet the need for enhanced documentation with an automated presentation builder, supporting and justifying their recommendation for their client’s specific financial situation and goals. The Optifino platform helps streamline the entire recommendation process, helping agents and advisors get back valuable time that can be used to focus on education and demonstrate their value beyond product sales. We provide an annual review of client policies after the purchase of the investment and over the course of the relationship, meeting new monitoring obligations.

In this rapidly changing regulatory environment, Optifino emerges as an indispensable tool for life insurance agents and advisors. Our platform is designed to ensure that the chosen policy aligns with their best interest. By using a platform that prioritizes the client's best interest and complies with regulatory standards, professionals can build stronger, trust-based relationships with their clients.

Life insurance technology are provided by David M Kleinhandler and Optifino. (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website is for informational purposes only. Products and specific product features may not be available in all states, and other limitations or restrictions may apply.

David M Kleinhandler California License: 0B65035

Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Understanding the New Expectations of Talent

With 80% of HR professionals struggling to find qualified candidates and 61% of CEOs acknowledging hiring challenges impact the ability to operate at full-capacity, the need to adapt is clear. The modern workforce is demanding more comprehensive benefits that address their unique needs, specifically benefits that support their financial well-being. A notable concern for both employers and employees is financial stress, which is known to impact productivity and job satisfaction. Approximately two-thirds of employees report that financial worries negatively affect their work and personal life, underscoring the need for benefits that can alleviate these stresses. HR leaders understand this and want to be able to provide more, with 83% of HR leaders concerned about the adverse effects of employees' financial issues on performance. 

Employees who are satisfied with their benefits are twice as likely to be satisfied with their jobs and 70% more likely to be loyal to their employer. According to TBWA, nearly two-thirds don’t use their benefits because they are not tailored to their needs. In light of this, providing benefits that genuinely meet the varied needs of employees isn't just beneficial—it's essential for retention. Optifino directly responds to the 88% of HR leaders who report employees requesting benefits not currently offered, offering a flexible and responsive solution that can be tailored to meet the evolving demands of the workforce.

Optifino: A Strategic Solution for Financial Security

Our concierge care takes the time to understand an employee’s financial goals and then inputs those into the platform to design the most personalized life insurance policy. Our transformative approach to life insurance creates a more holistic financial strategy that provides benefits within an employee’s lifetime and for their beneficiaries. Our Wealth Legacy Architects, paired with our technology, enables employees to integrate life insurance with their financial plan, providing a safety net that grows with their needs and can be accessed in retirement as supplemental tax-free income. Understanding that life insurance is not set-and-forget, we provide a lifetime of aftercare with annual reviews of an employee’s policy to ensure it continues to perform in alignment with their goals—creating peace of mind about the future for every employee. 

With a tailored life insurance policy, employees can plan ahead for them and the welfare of their loved ones, reducing the stress associated with future financial uncertainties. With only 55% of employees feeling financially healthy now — a fall from 64% in 2022, there is a big opportunity to introduce innovative approaches to financial planning that are streamlined, tech-optimized and easy to understand. Nearly 85% of employees report that they do not use their benefits because they are confusing, so we place a big emphasis on education. We take the time to ensure that clients understand the spectrum of policy design options and the many goals the different policy types accomplish. Below is an example of a piece of marketing collateral that we provide to our clients so they understand the many ways in which we can help.

As you can see, we not only address the immediate financial concerns of employees but also assist in building their long-term financial stability. We are able to provide tailored solutions that prepare for longevity, comfort in retirement, and minimize taxes with no HR administration needs and at no cost to the employer. Our expert Wealth Legacy Architects and Wealthcare back office support means employees are educated and supported every step of the way, in the goals discovery, policy design process, and the rest of their life. Providing a retirement solution that can address the needs of diverse age groups and backgrounds isn’t just a good idea—it’s a strategic business decision. Optifino stands at the forefront of this change, offering a robust life insurance solution that not only meets but anticipates the financial needs of employees, promoting greater satisfaction and loyalty. By adopting such tailored financial benefits, companies can better support their employees, leading to improved retention rates and a more motivated workforce.

Key Takeaways

- Employee expectations have evolved to prioritize flexibility, work-life balance, and financial security.

- Financial stress is a major concern impacting employee productivity and job satisfaction.

- Tailored benefits like those offered by Optifino can significantly enhance employee retention and loyalty.

- Optifino's life insurance platform addresses key areas such as family banking, retirement, and estate planning, providing a comprehensive solution for today’s workforce.

Life insurance technology are provided by David M Kleinhandler and Optifino. (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website is for informational purposes only. Products and specific product features may not be available in all states, and other limitations or restrictions may apply.

David M Kleinhandler California License: 0B65035

Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

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Hedge Against Volatility

Permanent life insurance offers a unique combination of growth potential and stability. It offers policyholders greater control over their financial destiny, allowing for flexible premium payments, the ability to optimize towards better performing life insurance products, and access to cash values that can serve as a financial safety net or liquidity to invest in opportunities. When advisors are able to tailor life insurance policies—factoring in life stage, income-affluence, and goals—policyholders have a greater understanding of how their life insurance policy will work towards their goals. The growth of cash value within many permanent life insurance policies can often increase more quickly than inflation, providing a potential hedge. The cash value can then be accessed without paying capital gains or income tax.

Planning for Retirement

According to a new report from Northwestern Mutual, Americans now believe they need $1.46 million to retire comfortably — a jump of 53% from their savings target in 2020. Whether this is driven by Americans wanting to spend more in retirement or concerns over inflation, life insurance is too frequently overlooked by people as an effective asset for creating a holistic retirement plan. When tailored for your goals and aligned with your broader portfolio, the cash value can provide accessible, supplemental retirement income when needed. Take the below example: where we assume the client contributes $10k in premiums to a Whole Life policy per year for 10 years starting at different ages.  

If we’re assuming that $1.46 million allows for a comfortable retirement and that the cash value grows at an 8% return, then we can get pretty close to that amount if we initiate the policy at forty years old (and easily surpass that mark when initiated at thirty). While this projection is based on a Whole Life policy, the spectrum of life insurance policies create a plethora of approaches to embracing growth, protection, and risk. The policy attributes that a policyholder needs to prioritize changes based on life stage and wealth, so it’s imperative that a policy is reviewed annually to ensure it stays on track of the projected outcome. If not, the ability to transfer your policy to a better performing product with a 1035 exchange can help insulate from uncertainty and volatility. 

While policy performance is ultimately dependent on the performance of the carrier and the fine print of your policy, the takeaway is clear: permanent life insurance creates peace of mind for those who want to be comfortable and pursue their passions in retirement. This all begs the question. How do you avoid the hidden dangers of the fine print and keep track of policy performance against your goals?

Fine Print & The Importance of the Annual Professional Review

The reason for all the fine print is not for any nefarious reason, but because the carriers introduce thousands of product iterations across 10+ types of life insurance product types. In other words, they constantly introduce new product innovations to capture new niches of the market and insulate themselves against market volatility. This means that the fine print can vary widely from policy to policy, and carrier to carrier, based on your risk profile. Keeping up with how the fine print affects policy performance, in addition to the constant product innovations, is too much for any one person to handle—policyholder or advisor. 

We can help you (or you and your client) unlock the strategic power of permanent life insurance in retirement planning, and we continue to work with you to optimize your policy against your goals when they evolve. We will identify the best policy out of hundreds of thousands of potential outcomes based on your life stage, risk appetite, and desired premiums—propelling your growth and one step closer to the retirement you deserve. Tailored permanent life insurance stands as a resilient solution for individuals looking to build and protect their wealth amidst economic uncertainty, and we at Optifino will ensure you feel comfortable navigating it.

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Life insurance technology are provided by David M Kleinhandler and Optifino. (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website is for informational purposes only. Products and specific product features may not be available in all states, and other limitations or restrictions may apply.

David M Kleinhandler California License: 0B65035

Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

The first step of the journey with Optifino begins with goal discovery, where we take the time to get to know the life stage and wealth priorities of a client. While most advisors or agents will ask for your goals and factor that into their recommendation, we built the technology to better identify the right policy based on their goals while removing any unconscious biases from the recommendation. By taking a more holistic approach to portfolio design, our Wealth Legacy Architects help propel your wealth goals forward, helping you move seamlessly through every life stage. 

One of the first steps in the goal discovery process is understanding whether you are still building your wealth or whether you already have wealth. We call this the accumulation vs. protection question, in which there also is the option to take a “balanced” approach. One of the most often recommended policies for a balanced approach, as identified by our experts and AI, is a product called “GVUL” (Guaranteed Variable Universal Life). The G in GVUL means it provides a guaranteed death benefit. The Guaranteed Death Benefit can often be higher than other Guaranteed products like GUL, GIUL and the guaranteed portion of WL. This is due to the potentially lower reserves the carriers need to keep on their balance sheets with variable products.

GVUL policies also allow the policy holder to dictate how the funds the underlying capital is invested in. If the capital generates a >7-8% return the cash can grow to the point where the death benefit exceeds the guaranteed amount. This is a great product for estate planning and it also allows for greater cash accumulation that can be borrowed against tax-free—if it performs well. In these cases, the cash can be used for retirement, passion projects, really anything. With the underlying capital being allocated to uncapped equity linked products you have the potential to substantially outperform the guarantee. The choices for what to allocate the capital have been improving. For example, Penn Mutual recently announced an expanded Vanguard fund lineup for allocation choices.

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The effect of the length of the Guarantee

We are able to choose the length of the guarantee with all products that are approved on the platform. Usually, you can choose between age 85 all the way to age 121, and understanding the effect of this choice is paramount in optimal design. 

Let’s look at a hypothetical client: Male, 45 years old, preferred health, GVUL, 10 pay @ 100k / year for 10 years. 

The below graph compares the guaranteed death benefit of a GVUL policy from five top carriers at different lengths of guarantee. 

These are our key observations based on the comparison:

1. We are always amazed at the dispersion of the carriers! 

2. Generally speaking, the difference between age 100 and age 120 is negligible. So, if you are going to get a guarantee then go to 121! Can you imagine living to age 101 and then the policy lapses? … heart breaking! This is especially true if we are talking about policies on younger people that may actually live that long. 

3. The Death Benefit substantially increases when you lower the guarantee to age 85 or 90. 

Is the higher Death Benefit with a lower age guarantee worth it? 

In order to understand the tradeoff, we need to start by understanding the concept of “NAR” (Net Amount at Risk). NAR is defined as the difference between the Cash Value and the Death Benefit of a policy. This is the amount of money the insurance company is on the hook for at any given time. The amount of money the insurance company is charging you on any given year is the “COI” (Cost of Insurance) is multiplied by the NAR. This means the tradeoffs of a higher guaranteed death benefit are: 

1. Plus: A high guarantee is great because you feel peace of mind knowing your beneficiaries get a higher guaranteed death benefit.

2. Minus: A high guarantee creates a larger NAR, and this cost slows the cash build up. 

The Securian product (below) demonstrates this very clearly. Here is the chart for the first 30 years of the policy. 

The extreme example of a policy guaranteed to age 85 shows by far the best Death Benefit, but you can see how the cash grows much slower. 

There are two major effects of the cash growth: 

1. The faster the growth, the faster you have the chance to “break the corridor” (i.e. the cash value exceeds the guaranteed Death Benefit)

2. If the cash grows very high, substantially over the death benefit, you can safely withdraw or borrow capital

Let’s zoom in on the death benefit around the time the corridor breaks: 

This is at an 8% gross return. What you see is the lowest guaranteed benefit (age 120) breaks the corridor first and then has the chance to have the highest ultimate death benefit. 

To further visualize this here is just the Age 120 policy: 

If the NAR is too much it will have a very large drag on the cash and can eventually cause the policy to lapse.

Here is a zoomed-out view of the cash values at an 8% gross return: 

As you can see with the dashed light green above, representing a 10-pay GVUL policy guaranteed to 85, the cash value drops precipitously over the course of a few years. When the cash hits zero the policy will lapse (as seen by the below graph)! 

When we look at a 5% gross case for all the carriers with an age 90 guarantee result becomes even scarier:

They all lapse! 

Key Takeaway

If you want a guarantee, pay for it all the way to 121. The balanced approach provided by GVUL policies creates substantial potential upside while promising protection. Actual performance will vary based on how the underlying capital is allocated and based on the terms offered across carriers based on your profile. Each carrier will tailor the fine print—that impacts policy performance differently—based on your demographics and budget needs so carriers do not always perform in the ranking as illustrated in the examples above. We can help you quickly understand your potential outcomes based on your goals, and, if you already have one, compare your current policy with one more aligned with your goals. 

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The specific products we used are:
Lincoln VULone (2021)
Securian Variable Universal Life Defender
Prudential VUL Protector
Nationwide VUL Prtector II
PennMutual Protection VUL

Life insurance technology are provided by David M Kleinhandler and Optifino. (“Optifino”). Optifino is a licensed insurance producer in all states where it offers products, and acts as an agent for various insurance companies. License information available here. The information on this website is for informational purposes only. Products and specific product features may not be available in all states, and other limitations or restrictions may apply.

David M Kleinhandler California License: 0B65035

Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W Dry Creek Circle, Suite 800, Littleton, CO 80120, 303-797-9080. Optifino is not affiliated with The Leaders Group, Inc. Check the background of your financial professional or broker/dealer with FINRA BrokerCheck.

Life insurance offers the benefit of downside protection and can be used as a hedge against the larger investment portfolio, however the commission-based sales model that dominates the life insurance industry often complicates this endeavor. When properly designed and aligned with financial goals, life insurance plays a pivotal role in developing a holistic financial plan, especially for high net worth individuals. However, RIAs often lack the education, tools, and infrastructure to navigate the walled gardens between carriers and the opaque fine print of neverending product innovations. Moreover, with increasing regulation by way of Reg BI and FINRA, the potential for conflict of interest and the risk of violating fiduciary duty is increasing, 

Bias and Its Evolving Context

Bound by fiduciary duty, RIAs must prioritize products that mitigate conflicts of interest, yet infrequently integrate life insurance into their offering—some even view it as financial competition that decreases their AUM. Moreover, because of their bias against life insurance, they see life insurance as a strategy that results in lower wealth for their clients, rather than downside protection or a tax-advantaged wealth accumulation vehicle. This failure to manage risk exposes the client to the possibility of financial disaster given how difficult timing the market is for even the most savvy investors. 

The failure to recommend life insurance products as a tax-efficient accumulation or protection tool means many RIAs are at risk of not fulfilling their fiduciary duty. The RIAs that do not recommend the downside protection suffer from overconfidence bias, where they believe in their superior ability to time the market. If and when they do recommend these products, they must rely on shortcuts to their recommendations because of the complexity involved with analyzing the market without the proper tools. This cognitive shortcut is known in psychology as the availability heuristic whereby RIAs rely only on the latest news or recent market performance to inform their recommendation, instead of taking a product- and carrier-agnostic approach to their recommendation. Recency bias means both RIAs and agents tend to recommend the most recent product innovations, evidenced by the concentrated market share of IUL recommendations made by independent agents.

However, the landscape is shifting. Agents and advisors are increasingly scrutinized to ensure compliance with evolving regulations and fiduciary responsibilities. This scrutiny aims to align their practices more closely with the fiduciary standards RIAs adhere to, focusing on the client's best interest above all. Despite this evolution, the core issue remains: how can RIAs reconcile their commitment to their client's interests with the need to navigate an opaque industry traditionally viewed with skepticism? As the iconic Mike Tyson once said, everyone has a plan until they get punched in the mouth. Every RIA needs to understand and plan for the “what ifs” in life, and life insurance is one of the most dynamic ways to do so. 

Steps Towards Integrating Life Insurance into Financial Planning

Embracing Due Diligence

In this changing regulatory environment, RIAs must conduct thorough due diligence to navigate life insurance options confidently. This includes assessing the cost of insurance, the financial stability of insurance companies, and the accuracy of policy illustrations. Understanding these factors is essential for RIAs to recommend policies that align with their client's economic objectives, however the complexity of the product and frequency of product innovations means it's increasingly difficult for RIAs to stay informed. They need support, through technology and back office support, to compare the entire product set and be able to communicate the impact of life insurance products on a client’s financial strategy. We built our platform to streamline the due diligence required, and bring more pricing transparency to when costs could vary as much as 60% for the same product across different carriers.

Advancing Knowledge and Expertise

More than one-quarter (27%) of high net worth practices create customized portfolios for every client account, while a combined 40% report use either standardized or adjustable model portfolios constructed within their practices (Cerulli 2023). While this extends outside of life insurance, the takeaway is clear: too few create customized financial plans for their clients. The amount of practices that still rely on standardized or adjustable model portfolios means the portfolio creation process is still riddled with biases, especially when the advisor or RIA lacks the tools, knowledge or expertise in the specific financial asset. The complex nature of the life insurance product set means there is a high opportunity cost to advancing knowledge and expertise with the current industry tools and technology. 

Mitigating biases and understanding the nuanced benefits of life insurance will improve when the recommendation tools and distribution channels integrate education into the policy creation process itself—making understanding the strategic applications more easy to understand. The inability for RIAs to clearly communicate the dynamics of life insurance results in them recommending investing more money into what they already know, since traditional investments are easier to explain and what their clients expect. With limited expertise and support systems comes poorer recommendations that ultimately leave the client dissatisfied because not only was their policy not designed in alignment with their goals, but nor are expectations properly established so disappointment always looms large. 

Assessing Fiduciary Duty & Recommendations in a New Light

With the life insurance industry facing increased regulatory scrutiny and a push towards fiduciary responsibility, RIAs will need to seek opportunities to engage with platforms and solutions that help them abide by their fiduciary responsibilities. The good news is that 69% of advisors and HNW practices cite streamlining operation inefficiencies and enhancing advisor supporting tools as top tech initiatives in 2023 (Cerulli 2023). These tools are predominantly being utilized to interact with clients (85%) and goals-based financial planning tools (78%). However, the biggest barriers to implementing solutions are ensuring the costs are not prohibitively high for firms, that there is sufficient time to implement solutions, and ensuring there is a proper support staff (Cerulli 2023). 

The benefit of our Optifino model is that we can offer our advisor planning and support tools at a cost-effective level, while decreasing the time-constraints of creating a personalized plan and also providing proper support staff. Fiduciary duty and keeping client best interests in mind will only become more complicated with a growing product set and increasing regulation, and without the proper technology to eliminate bias and mental shortcuts, recommendations will not serve client goals and be cause for even more regulation. Optifino helps RIAs offer more personalized service in compliance and as required by the regulatory landscape, while making it both time- and cost-effective to do so. 

Leveraging Technology and Seeking Independent Insights

RIAs recognize the need to expand service offerings—towards assets that provide accumulation and protection properties—through technological capabilities that service different products in order to properly appeal to high net worth clients. This is because more HNW individuals are choosing their advisor based on the services and client experience offered—an increase of 7 percentage points in the last five years (Cerulli 2023). In other words, a technology platform that empowers RIAs to service a new financial asset (i.e. life insurance) which can be used for both estate and tax planning in a goals-based model will attract new clients. New innovations in data processing and analytics, including machine learning and AI, significantly reduces the time constraints, the barriers around education for RIA and client, and time constraints around policy optimizations and portfolio design. 

However, technology must still be paired with human-expertise, and specifically, human-expertise needs to lead the technology to inspire more trust in the client. The majority of Americans say communicating with an actual person is what makes an interaction with a salesperson or customer service department a good experience (Cerulli 2023). Advanced technology like Optifino’s can significantly aid RIAs in comparing life insurance products, understanding underwriting standards, evaluating pricing, and saving time in doing so, but people trust technology-powered recommendations more when they are confirmed and explained by an expert. We provide the sales support for both RIAs and their clients to guide them through the policy design process, answer any questions, and subsequently manage their policy afterwards.

Paving the Path for RIAs

The focus of RIAs on brokerage accounts and investment portfolios are not only driven by bias, but they hurt the ability of HNW individuals to accomplish their financial goals. RIAs will create renewed success for their practice if they are able to build more holistic financial plans. HNW people overwhelmingly identify wealth preservation as their primary goal (72%), underscoring the importance of tax minimization (63%) and wealth transfer strategies (48%) (Cerulli 2023). Life insurance is one of the most powerful vehicles for wealth preservation, especially when it comes to tax minimization and wealth transfer strategies. RIAs would benefit from prioritizing it more as a strategy to building a holistic portfolio. Now there is finally a partner in Optifino that will help pave the way for RIAs to be able to increase their offerings while not increasing costs or time constraints. 

For RIAs committed to delivering comprehensive and client-centric financial planning services, the integration of life insurance into their advisory portfolio is essential. RIAs that embrace technology to provide more holistic service offerings, create more goals-based personalization, integrate education into the consumer experience, and navigate the evolving regulatory landscape will differentiate their practice. Optifino is designed to reduce the biases from an analog industry and meet rigorous due diligence and compliance requirements. Our approach ensures that life insurance strategies are aligned with clients' broader financial goals and reinforces the RIA's role as a trusted advisor in navigating the complexities of financial planning.

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