Insurance Contracts as a Distinct Allocation Alongside Traditional Asset Classes

Advisors have historically built portfolios around a core set of traditional asset classes — equities, bonds, real estate, and credit. Each of these plays an important role, but they also tend to move together during periods of stress. Increasingly, financial professionals are exploring complementary allocations that can provide balance and independence from these market-linked dynamics.

Allocations backed by insurance contracts represent one such complement. Their value is derived not from market cycles, but from actuarial assumptions and contractual structures — making them fundamentally different from equities, fixed income, or property.

Comparing Key Characteristics

Performance Drivers

• Traditional assets are influenced by earnings, interest rates, property cycles, and economic growth.

• Insurance contracts are linked to policy maturities and actuarial timelines, operating independently of market conditions.

Return Profile

• Equities, bonds, and property deliver returns tied to broader financial and credit cycles.

• Insurance contracts have historically demonstrated steady, non-correlated results, offering advisors a distinct performance stream within diversified portfolios.

Volatility and Correlation

• Traditional assets often exhibit rising correlations, particularly during macroeconomic stress.

• Insurance contracts remain unaffected by these cycles, serving as a stabilizing allocation alongside other holdings.

Liquidity Considerations

• Equities and bonds offer daily liquidity; real estate and private credit are more constrained.

• Insurance-contract allocations are long-term and illiquid by design, best suited for patient capital with multi-year horizons.

Risk Profile

• Traditional assets carry market risk, credit risk, and interest-rate sensitivity.

• Insurance contracts carry longevity timing and premium obligations, which can be mitigated through diversification, underwriting discipline, and professional servicing.

  
  

A Complement, Not a Replacement

Insurance contracts are not positioned as substitutes for equities, bonds, or property. Rather, they serve as a complementary allocation that strengthens portfolio resilience by adding a return stream distinct from traditional market cycles.

For advisors, this represents an opportunity to offer clients balance, stability, and confidence through a carefully governed, institutionally supported allocation.