In this video, we explore how to model withdrawals from a Whole Life insurance policy in Voyant and examine the impact of accessing cash value during a market downturn. Learn how this strategy can provide stability and liquidity when investment assets are under pressure, helping clients weather volatility without disrupting their long-term plan. Ideal for financial advisors looking to demonstrate the strategic value of permanent life insurance in retirement and risk management planning.
Transcript
In today's training, I’m going to walk you through how to use the Voyant software to demonstrate the value of taking planned withdrawals from a whole-of-life policy during a major loss event. We’ll then compare that against not taking those withdrawals so you can clearly show the value of this strategy to your client.
We’ll start by creating a plan that shows what happens when withdrawals aren’t taken. In this plan, I’ll drop in a major loss event to the client’s cash flow. To do that, I’ll go to Plan Settings and open the Major Loss section. Here you can create any major loss scenario you’d like—the setup is fully customizable. You can set the default age for the event and how many years it lasts.
In this example, I’ll model two years of major loss: a 10% drop in the first year and 8% in the second. I’ll click Done to save. Then I’ll go to the timeline, click the plus button, select Events, and scroll down to Special Events. These trigger specific actions in the plan. I’ll choose the major loss event we just created, which defaults to age 65 based on the settings we entered earlier. Clicking Done adds it to the plan.
Immediately, we can see the retirement goal drop from 100% to 76% because the assets are no longer growing as expected. On the dashboard, we now see some projected shortfall later in the plan. If we turn on Details, we can see which assets are being used early on—taxable accounts first, then Social Security, then qualified accounts. Switching to Year View, we can review the growth rates, including the fixed growth drop rates in the first and second years.
Next, I’ll create an alternative “what if” scenario where we take a line of credit from the whole of life policy’s cash value. I’ll name this plan “Take Withdrawals from Whole of Life.” In the top right corner, you’ll see we’re now in this scenario, but we can switch back and forth at any time.
In this plan, I’ll go to the existing whole of life insurance policy, which already has a current cash value entered. I’ll link a line of credit to it by naming it, entering an estimated interest rate, and adding any regular payment amounts if applicable. If the client has already taken money from this line of credit, I’ll enter that balance; otherwise, I’ll leave it at zero. Clicking Done twice saves it.
Now I’ll adjust the liquidation order in Plan Settings. I’ll move the line of credit to the very top so it’s used first. I’ll also ensure its withdrawal limit is set to “As Needed,” allowing the software to draw from it when required. Turning on Details, we can see in green that for the first three years, we’re pulling from the line of credit to fulfill expenses, giving other accounts time to recover from the market downturn.
Finally, I’ll go to Chart View and compare the two scenarios side-by-side. The plan using the whole of life line of credit has three extra years—and some additional months—of liquidity compared to the plan without it. This demonstrates to clients how pulling from the line of credit during a major loss event can protect their portfolio, allowing it to last longer.
You can also compare the Assets charts between scenarios to show clients exactly how much longer their assets remain in the plan.
If you have questions or want to model a specific scenario, you can reach me at support@planwithvoyant.com or click your client’s name in the top right corner, select Request Support, enter your question, and share client access.