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LIDO INSIGHTS | Asset Protection: What You Should Consider Now | November 2021

Published 11-01-2021

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By: Scott Brokaw


As your wealth continues to accumulate, you may find yourself reconsidering your insurance related decisions.  Priorities change, and the need for specific asset protection can become more or less valuable.  We all understand that maintaining home, auto and health insurance are necessities, but when looking at other types of coverage, the answers may not be as simple.  Let’s take a deeper dive into two other types of coverage to better understand the cost, value and other important decision-making factors.

Life Insurance – One of the most popular uses it to protect the family’s income in the case of a premature death.  With a home mortgage and young children, the need to protect is extremely high.  This risk can be covered by the purchase of term life insurance, which is the most cost-effective choice.  It can be designed to align with the amount of years left until retirement, children’s college expenses, and the amount of years left on the home mortgage.  As you get older and your wealth accumulates, the need for this type life insurance often becomes less important, so it’s important to design the plan with these considerations in mind. 

Another potential need for life insurance is for use in the estate planning process.  Life insurance proceeds remain untaxed at death, and if constructed properly using a Life Insurance Trust, the proceeds can be outside of the estate and therefore not subject to estate taxes.  With the uncertainty surrounding the future estate tax laws, this is a conversation to be had with your advisor and estate planning attorney (along with an insurance expert) to determine whether this is a valuable tool and the best way to design a plan.

Long Term Care Insurance – This type of coverage primarily pays for supervision or assistance with everyday tasks that the insured can no longer handle on their own.  As innovation in the medical community continues and people are living longer, this is certainly a topic many have considered.  The cost to have full time care or live in an assisted living facility could easily top $100,000 per year and will continue to increase.  Because of this, we’ve seen a drastic increase in the price of long-term care insurance.  The other thing to consider is that the premiums are generally not guaranteed meaning the insurance carrier has the ability to increase the cost over time.  This has been a consistent issue over the past few years, and we’ve even seen insurance carriers stop offering new coverage. 

There are hybrid life / long term care insurance products that are worth considering as well.  The accumulated value in the life insurance plan is designed to grow and can be tapped into for long term care needs if/when needed.  They don’t generally provide as much benefit or flexibility, but do provide peace of mind if the coverage is never used, as the death benefit would then be paid out to the beneficiary.  When analyzing the pros and cons of long-term care insurance, we often find that with enough wealth, a client can afford to ‘self-insure’ and the need for the high-cost insurance is not always necessary.

Given the variety of scenarios involved in analyzing the need for these types of insurance, we would recommend you take the time to discuss these matters with your trusted advisors. 

Lido Advisors, LLC is an SEC-registered investment adviser. Please note that SEC registration does not denote any particular competence or ability and no inference to the contrary should be made. For complete information on the services we provide and our fees, please review our Form ADV at adviserinfo.sec.gov, call (310) 278-8232, or mail us at 1875 Century Park East Suite 950, Los Angeles, CA 90067.

Past performance is not indicative of future performance. The information in this report is for informational purposes only and should not be relied upon as the basis of an investment or liquidation decision. Nothing in this report shall be construed to be a solicitation to buy or offer to sell any security, product or service to any non-U.S. investor, nor shall any such security, product or service be solicited, offered or sold in any jurisdiction where such activity would be contrary to the securities laws or other local laws and regulations or would subject Lido to any registration requirement within such jurisdiction. All content herein has been obtained from sources deemed to be reliable, but is subject to unintentional errors, omissions and changes without notice, and is not warranted as to its accuracy or completeness. You should not rely on the information contained herein, and should rely solely on, and carefully read, the appropriate offering and related subscription materials relating to any specific investment product before making any investment decision.

Not all investments are suitable for all clients. It should not be assumed that any security listed or any recommendations made in the future will be profitable or without loss, including risk of loss of principal, or will equal any prior performance. All investments involve the risk of potential investment losses including the potential risk of loss of principal as well as the potential for investment gain. Further, the prior performance figures indicated herein represent portfolio performance for only a short time period and may not be indicative of the returns or volatility each portfolio will generate over a long time period. The performance of the portfolios should also be viewed in the context of the broad market and general economic conditions prevailing during the periods covered by the performance information. Any references to future returns/risk are not promises of the actual return the client portfolio may achieve. Before investing, investors should seek financial advice regarding the appropriateness of investing in any securities of investment strategies discussed. Not all investments are suitable for all investors.

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Lido Advisors, LLC is an investment advisor registered with the Securities & Exchange Commission. SEC registration does not denote competence, ability, or expertise.  As an SEC-registered advisor, we are required to publicly file certain information with the SEC as well as furnish or provide you with the opportunity to obtain information about our principals, employees, products, services, and fee schedules.  Please review our Form ADV, which provides this information, at adviserinfo.sec.gov, call us at (310) 278-8232, or mail us at 1875 Century Park East, Suite 950, Los Angeles, CA 90067 for a copy of our Form ADV.

The future is uncertain and cannot be predicted.  Past performance is not indicative of future performance. These materials are provided for informational and illustrative purposes only and should not be relied upon as the basis of an investment decision. You should not construe this as investment advice or an offer to buy or sell securities.  All content herein has been obtained from sources deemed to be reliable, but is subject to unintentional errors, omissions and changes without notice, and is not warranted as to its accuracy or completeness. You should not rely on the information contained herein, and should rely solely on, and carefully read, the appropriate offering and related subscription materials relating to any specific investment before making a decision to invest.

Not all investments are suitable for all clients. Investing carries a risk of loss, including the complete loss of principal. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable or suitable for your financial situation or risk tolerance.  Any references to projected or future expected returns or risk are not guarantees, promises, or assurances that these outcomes will be achieved.  Before investing, you should seek financial advice regarding the appropriateness and suitability of the contemplated investment as not all investments are suitable for all investors.

We do not provide legal or tax advice.  Any investment has tax and legal consequences.  You should consult with a licensed professional prior to making any investment.