Life insurance strategy refers to the deliberate way life insurance is structured and used to achieve specific financial, business, or estate goals beyond simple income replacement. A strategy might involve layering term and permanent coverage, using survivorship policies for estate tax liquidity, funding buy sell agreements, designing premium financing structures, or integrating policies with trusts and charitable vehicles. Effective life insurance strategy balances product features, underwriting realities, tax rules, and client behavior. It also anticipates future flexibility needs, such as the ability to adjust death benefits, change premium patterns, or access cash value without jeopardizing coverage.

In practice, advisors develop life insurance strategies by starting with client objectives and then reverse engineering products and structures to fit. For example, a couple concerned about estate taxes might use a survivorship policy owned by an ILIT as part of a larger wealth transfer strategy. A high income professional might adopt a heavy funding strategy with indexed universal life to supplement retirement income, while a business owner might combine key person coverage with a cross purchase buy sell funded by policies on each partner. Advisors also consider exit strategies, such as policy sales, internal 1035 exchanges, or using riders for chronic illness or long term care. Strategic thinking requires collaboration with attorneys, CPAs, and lenders, especially for advanced concepts like premium financing or split dollar. By articulating a clear life insurance strategy rather than simply presenting a policy, producers help clients understand how coverage fits into broader plans and why particular design choices matter.