Life Insurance
We'll Discuss
Life Insurance In Retirement
You probably have a basic understanding of what the purpose of life insurance is: to provide for your loved ones after you pass away. However, life insurance in retirement can potentially provide much more than just a death benefit. You may be able to use an indexed universal life (IUL) insurance policy as a source of tax-free* income for yourself while you are still alive. Life insurance in retirement is an effective way to protect your money while earning interest at a reasonable rate.**
Indexed Universal Life Insurance in Retirement
Depending on your individual situation, using life insurance in retirement may be a great solution. This is because life insurance policies have different rules compared to typical retirement accounts and may come with certain benefits that they don't provide. For example, the tax-free* income benefits of an IUL. With your current retirement plan, such as a traditional IRA or 401(k), you pay taxes on your withdrawals. And, when you get to a certain age, you must withdraw some funds and pay those taxes. This is what's known as Required Minimum Distributions, or RMDs. If you're worried about this consequence, an IUL may be of great interest to you. This is because you could possibly move some of the money from your retirement accounts directly into an IUL instead. You could then take that income tax-free* from your IUL.
Choosing the Right Policy
As you near (or enter) retirement, your financial objectives might change. Usually, retirees begin looking at ways of protecting their money more. Similarly, your life insurance goals may have changed. The main purpose of life insurance is to provide for your family after you are gone. While this is still important to maintain, it may become secondary to protecting your savings while you're alive. Retirement brings with it a number of additional challenges that may impact the success of your strategy. Therefore, choosing the right type of life insurance is vital. We can help you focus on protecting your money and your loved ones. An IUL may be one way of achieving these goals.
Life Insurance in Retirement: The Benefits
There are quite a few benefits to using life insurance in retirement. First, let's go over the aspects of an IUL that can help you during your retirement years:
- An IUL’s cash value is protected from stock market loss
- IULs use a stock market index to determine cash value growth
- The potential to lock in what you accumulate
- You may fund the policy all at once, or over time
- Income tax free* cash value growth
- No penalty for accessing funds before the age of 59 1/2
Benefits of an IUL that serve to benefit your loved ones after you are gone include:
- An immediate death benefit, potentially much greater than the premium paid
- Tax-free* death benefit
- The benefit goes directly to beneficiaries, avoiding probate
- The death benefit can increase over time
