Life Insurance:
Retirement Life Insurance
Retirement life insurance may be a valuable part of your overall retirement strategy. Why is this the case, you may ask? Let us explain.
Retirement Life Insurance
You may wonder if you need retirement life insurance.
First, you should know that some types of life insurance may be useful in retirement. For one thing, life insurance can leave some funds behind to those you love. However, retirement life insurance may offer more than just a death benefit. For instance, let’s look at an indexed universal life (IUL) insurance policy. With an IUL, you may be able to receive a form of income tax-deferred or even tax-free*. Also, an IUL might be a way to shelter some of your assets. Just like all retirement options, an IUL may not be for everyone. But, it is an option that may be worth looking at.
Why else would someone look at an IUL as an option for retirement life insurance? How about potential returns? Perhaps you have a low-interest money market account. Or, maybe you have a low-performing CD. If so, an IUL may be something to consider. Although there is not guaranteed interest, you do have the protection of your money in the policy via the insurance company. In addition, you may be able to access potential indexed interest as well.
The Role Of Retirement Life Insurance
For some retirees, life insurance may be part of their strategy.
Because of potential tax-free* income, an IUL can be beneficial in some cases. Of course, and IUL is an insurance policy. As such, the premium you pay has different rules when it comes to taxes. Also, the ways you can use the money in an IUL differs. Unlike investment accounts, the rules for an IUL include the terms and conditions of your policy.
- For example, when and how you access your money may differ.
For those with a 401(k) or a traditional IRA, your income is taxable. Once you hit a certain age, you may be required to withdraw money. So, those taxes may not be avoidable. This required minimum distribution (RMD) must be taken out properly. If not, you may get a heavy fine. However, there may be another strategy.
- For example, if some of your money is slowly put into a retirement life insurance.
In that case, you may be able to withdraw some money from the IUL later without income tax. Or, you might be able to defer the income tax. Each situation is different so be sure to reach out to learn more.
Putting Money Away In Retirement
Maybe you want to know that your money will be there for you when you need it. Or, perhaps you like the idea of your family being taken care of when you’re gone. Indeed, many retirees look for different strategies for their money once they hit retirement. Earlier in your career, risk may have been ok. But, now, you may want to have less risk. For example, you may want income for your family once you’re gone.
One way to do this may be to use an IUL conversion strategy.
If you have a current life insurance policy, it may be able to convert to an IUL. In addition, tax issues may change over your lifetime. Of course, this will depend upon the details of your current policy. Therefore, be sure to reach out for a review of your current policies. We are happy to discuss your potential options in terms of retirement life insurance.
Potential Benefits Of Retirement Life Insurance
When it comes to an IUL and retirement life insurance, here are some potential benefits:
- Cash value protection - regardless of the market conditions
- Stock market does not link with your IUL (instead, an index does)
- Locking in potential gains may be an option
- Potential to diversify your indexes
- Possible tax-free* or tax-deferment of income
- Can fund slowly over time (or, all at once)
- Potential to pull out money before age 59 1/2
Another aspect of an IUL is the legacy benefits. These may include:
- Benefit at death may be higher than the premium you paid
- Death benefit not subject to income tax
- Probate court not necessary for IUL death benefits
- Potential to pay family income over time or in a lump sum
- Possibly chronic illness or terminal illness conversion benefit
Lifelong Financial Solutions believes each client deserves one on one attention.
When it comes to retirement life insurance each person has their own needs. We invite you to contact us to discuss your situation. We’re here to help you learn more about your life insurance and retirement options.
