Short excerpt from a Richard Canfield video discussing using life insurance policies as an alternative income source during market downturns. The speaker advises drawing needed passive income (example: $50,000/year) from an insurance policy—via collateralized access—so market assets can remain invested to recover principal and resume income generation; the policy also grows during the interim, offering financial and psychological benefits.
Chapters
Boom market went down. That's kick number one. Oh I got to take money out and now I've depleted the principal balance substantially so my ability to create continuity of income has been dramatically impacted because of that market shift. So when you have now an asset class that doesn't have that problem, the insurance if you wanted to you're going to take your passive income and let's just say it was $50,000 a year. Well rather than draining down your depleted reduced market value resources you can now access 50,000 from the Policy through a collateral instrument of some nature. Meanwhile you because you didn't touch the other assets you're giving them the time necessary for the market to rebound. So what if you had to do that for two, three, four years then the market comes back up, you didn't kill the principal so now you're back to being allow allowing that other asset or investment class to produce the income you need and meanwhile the policy grew the same timeframe too so that is a massive advantage both psychologically.