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OK, so I don't really have a financial adviser. However, our company just started offering 401Ks, and along with it we got a bunch of investment recommendations from the same company. Not sure which parts they get commission for. I went with most of his advice (401K allocation for example) but not sure about life insurance. He made it sound like the perfect strategy, but most everyone says life insurance is a bad idea. I did go through the health assessment - mostly because it's a free check-up, and I got the highest rating. But before I make a big mistake, I was wondering if I could get some overall input on my current and potential future investments.

About me: Single, 40-ish, no kids, renting and not planning on buying any real estate (personal choice), 100% debt-free, I live in a large metropolitan/expensive area and make $70,000-ish/year, I should inherit a nice house that I have to split with one sibling, and probably some other financial assets of unknown proportions.

Here is how the financial adviser summarized my situation, any input is greatly appreciated!

Our firm acts as the fiduciary advisory group on your company's 401k plan. We monitor the portfolio (add/change funds) as well as provide recommendations based on a participants risk tolerance. When we first met and completed your risk tolerance, you were a growth orientated investor followed by the completion of your 401k enrollment which you are contributing 5% (with a 4% employer match) of your salary. The growth allocation provides diversification at approximately 70% equities both domestic and international with 30% in fixed income/conservative investments.

Your 401k has earned 1.5% which may seem low at first glance but if compared to the Dow Jones Index of -.85% from the last full month March-April your account is performing terrifically. Moreover your account grew more than 2% over the Dow Index which many individuals refer to as the "US Market.” We also diversified your rollover IRA into similar allocations as before it was sitting in a single mutual fund whereas this allocation aims to give you a better chance to capture growth while minimizing your risk. You still have your stock portfolio account which we wanted to keep separate as this will be more of an aggressive investment account as well as a side “fun” account.

When we met you mentioned with your current situation you didn’t need a specific amount of life insurance to cover items such as mortgage, child's college tuition, household income/expenses but wanted a benefit for your beneficiaries at the least to cover funeral/administrative expenses. Since you were mostly interested in planning for retirement I recommended an insurance policy that will provide your beneficiaries a 100k death benefit but would also allow you to take the money that the policy earns for retirement income. The policy is a Annual Indexed credited Universal Insurance policy that builds cash value, which you have access to just like regular income in retirement. Meaning that every year the index (such as the S&P 500) is positive your cash value will be credited with that growth, but your cash value does not lose value in years where the index is negative. In the example I showed you, using actual real returns for the S&P 500 for the last 30 years if you saved $100/mo you would have a 100k death benefit and at age 70 you would be able to draw $15,500 worth of income per year. This way you are completing both needs, you have a death benefit for your family and you are planning for your personal retirement. And the Income is tax free, which could be similar to a $30,000 pension income stream if taxes go up to an expected 50% tax rate.

The carrier is North American Life and Health Insurance a AA rated company. We choose them because all of their policies are 100% convertible meaning we can change your policy at anytime, they offer over loan protection and a protected death benefit. With the convertibility, if in ten years you want to have an increased death benefit to cover a mortgage etc. we can use your same excellent health rating and change the policy using the initial rating. North American Life and Health Insurance is online and feel free to look them up, unfortunately there is not a website where you can go to look at your exact policy because we have not put it in force yet but I would be more than happy to provide you this same printed illustration that the carrier issued. I do think it would be very beneficial to go over it together to fully understand but if we are not able to connect I also have a book that goes over the strategy that I can mail/lend to you which is a short read (100pgs) and details the strategy if you prefer.
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