The overlooked role of insurance in protecting your portfolio

Read time: 5 minutes

When it comes to establishing and maintaining an investment portfolio, it’s not enough to simply grow your assets; you must also take steps to protect them. Insurance plays a key role in asset protection, as it can help support your portfolio’s long-term strategy by addressing financial risks that might otherwise disrupt your investment decisions. Yet, as vital as insurance is, many investors may be underinsured relative to their financial goals and risk exposure.

Here’s what you need to know about the important role insurance plays in protecting your portfolio.

Why insurance matters

Having the proper insurance coverage is important for several reasons.

• It can reduce the likelihood that you may need to sell investments at inopportune times.
• It can protect the wealth you’ve built and help keep you on track toward achieving your long-term goals.
• It can provide liquidity when unexpected expenses arise.
• It can be used as an estate planning tool to preserve your assets, fund your trusts and equalize your loved ones’ inheritance.

How insurance can protect your portfolio

There are several key ways insurance can benefit and protect your portfolio.

1. Income and asset preservation

If you become ill or injured and unable to work, your family’s long-term financial security can be threatened, particularly if that interruption lasts longer than expected. Without insurance, you and your family may struggle to cover your daily living needs, such as mortgage payments, utilities, bills or educational expenses. This could result in a need to sell out of investments at an inopportune time, potentially reducing investment capital and long-term growth potential.

Having the right insurance coverage in place can help protect your family from a loss of income and help ensure you can:

• Pay for daily living expenses
• Remain invested toward your long-term goals
• Maintain your retirement and education savings
• Ensure your portfolio remains intact

2. Long-term investment discipline support

Selling investments during a market downturn has the potential to lock in losses that may be difficult to recover from. Even if you don’t realize a loss when selling your investments, you could be missing out on the potential growth and compounding of those assets. Maintaining adequate insurance coverage can help ensure your assets remain invested during periods of uncertainty throughout your lifetime.

Insurance can also protect your loved ones from investment losses following your death. For example, consider a situation in which you die and your family members have an immediate need to access cash. Without the proceeds of a life insurance policy, they may be forced to sell stocks, retirement assets or real estate at unfavorable times.

Having the right insurance strategies in place can help support your portfolio’s long-term growth potential.

3. Multi-generational wealth preservation

Insurance, particularly life insurance, plays several key roles in estate planning. Proper insurance can:

• Provide immediate liquidity to pay for final expenses and outstanding debts, which can preserve an investment portfolio’s value.
• Cover estate tax liabilities for large estates that exceed the lifetime estate and gift tax exemption amount ($15 million in 2026), leaving more money for heirs.
• Equalize inheritances. For example, business owners who plan to pass their business to one child can name another child as the beneficiary of a life insurance policy to ensure the non-business-owner heir receives an equally valued inheritance.
• Be used to fund trusts such as an irrevocable life insurance trust (ILIT) or special needs trust (SNT).
• Support business succession plans by funding buy-sell agreements, or provide surviving partners with capital to purchase the deceased partner’s ownership share.
• Be used as a charitable giving strategy by naming a charity as the beneficiary.
• Be used to replace wealth designated for charity—such as assets held in IRAs or charitable remainder trusts (CRTs)—with IRA required minimum distributions (RMDs) or trust income used to fund the life insurance policy, while preserving the intended charitable gift and family legacy.

How Mariner can help

Maintaining the proper insurance coverage isn’t a backup plan; it’s a vital component of a healthy financial life. Insurance can protect your family’s income, support long-term investment potential and preserve your wealth for future generations.

At Mariner, we view insurance solutions as an integral component of your comprehensive financial plan. Our in-house insurance professionals work alongside your advisor to help identify and implement custom insurance strategies that meet your needs and protect against the specific risks you may face.

This material is provided for informational and educational purposes only. It does not consider any individual or personal financial, legal, or tax circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary or appropriate, individuals should contact their professional tax, legal, and investment advisors or other professionals regarding their circumstances and needs.

Any opinion expressed herein is subject to change without notice. The information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.

There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results, and nothing herein should be interpreted as an indication of future performance.

Insurance products do not protect against market risk or investment losses, and they do not guarantee investment performance or returns. Insurance is designed to help manage certain financial risks, such as loss of income or liquidity needs, which may indirectly affect investment decisions. All insurance benefits are subject to the claims-paying ability and financial strength of the issuing insurance company, and policy features, costs, limitations, and exclusions vary by product and issuer.

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