Insurance

Asset Protection What it is and why it matters

Asset protection is about having strategies to help protect your personal assets, to reduce risk if things go wrong.

You could receive a claim against your assets from creditors, someone who wants to challenge your estate after you die, or in the event of a relationship breakdown. If you’re a business owner, creditor claims, workplace accidents, lawsuits and insolvency could also put your personal assets at risk. Without protection, all your hard work could quickly come undone.

When should you start protecting assets?

The sooner you can implement protection strategies, the better. In reality, people tend to consider shielding assets when they establish a new business or make a significant purchase. Asset protection isn’t a “set and forget” exercise — as the value of your assets grow, or if new risks come to light, you’ll need to review and revise your strategies to reduce exposure.

Common asset protection strategies

As a business owner, limiting risk to personal assets could involve:

  • Taking out insurance, such as general liability, professional liability and workers’ compensation1
  • Restructuring business and/or asset ownership by establishing a company or trust, so personal wealth is isolated from business activities.
  • Transferring asset ownership to a “low-risk” spouse.

For individuals who are not business owners, family trusts and asset ownership transfers are common protection techniques.

Life insurance and creditor protection

The death benefit of a life policy is generally protected from creditors2 of the policy owner, the beneficiary and the insured person. Depending on the state you’re located in, the cash value component may be protected too.3

For more on how you can use life insurance as part of your asset protection strategy, talk to your financial professional.
 

1. Neither Guardian nor its subsidiaries issue liability or workers' compensation insurance.
2. State creditor protection for life insurance policies varies by state. Contact your state’s insurance department or consult your legal advisor regarding your individual situation.
3. Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
Pub11512 2022-136732 Exp. 4/24

Share |

Have A Question About This Topic?

Thank you! Oops!

Related Content

Social Security: Five Facts You Need to Know

Social Security: Five Facts You Need to Know

Here are five facts about Social Security that are important to keep in mind.

Financial Hacks for Millennials: It is Prime Time to Save

Financial Hacks for Millennials: It is Prime Time to Save

While research shows you are saving and earning more than your parents, (woohoo!), are you preparing for the future you want? How can you ensure you are on track to make the most out of these important decades?

7 Ways to Show Your Appreciation for Mom this May

7 Ways to Show Your Appreciation for Mom this May

For the unsung heroes who raised us, protected us, encouraged us and cleaned up after us, now is the chance to express our gratitude.