Life Insurance
Everyone has a different situation and retirement plan. Reach out to us to find out if an Indexed Universal Life Insurance policy is right for you.
Using Life Insurance For Retirement
Many people, when planning for their future retirement, overlook the role that life insurance could potentially play. Most people only know the basics when it comes to life insurance. But, not only does it provide a death benefit, you may actually be able to use life insurance to provide income while you’re still alive.
Additionally, life insurance doesn’t apply to the same tax rules as traditional retirement accounts. If you’re looking for a source of tax-free* retirement income, it may be able to help. And, you have a lot of flexibility when it comes to your money.
For example, an indexed universal life (IUL) policy could be used as a form of savings. An IUL can be used as a safe place to keep additional money in case of an emergency or other unpredictable large purchases. And, using the money in it instead of the money in your other retirement accounts for these types of costs, may have tax advantages. There are more benefits to this product.
However, the implications vary. We can help! If you’re looking for a financial planner in Honolulu, Kapolei, Mililani, Hawaii Kai, Hilo, Keaau, Ewa Beach, Aiea, Waipahu, Kaneohe, Kailua, or Pearl City, reach out to us.
The Basics
Taking Income From Life Insurance in Retirement
Most people know the basic purpose of life insurance: You can buy it to supplement your income once you’ve passed away. The right life insurance product can help you ensure your loved ones are financially secure when you are gone. However, there’s another potential benefit of life insurance regarding your retirement. Most people don’t realize that it can provide you with income while you are still alive.
An IUL policy could be an important component of your retirement plan. The funds from an IUL can be accessed during emergencies, or for big purchases you may want to make. And, using the money in the IUL allows your other retirement savings accounts to remain untouched.
Individualized Strategy
Tax-Free* Retirement?
Is retiring tax-free* even possible? Yes, with the right strategy. An IUL policy may allow you to access your cash value without being taxed. An IUL may serve as a source of tax-free* income to you, and get a tax-free* sum to your beneficiary or beneficiaries.
Living Benefits
Retirees that use an IUL as part of their retirement strategy have the potential to receive many benefits. For example:
- You can protect the money in an IUL policy even in a down market
- A stock market index affords you with the possibility for cash value growth
- You may potentially choose the index or indexes you want for your IUL
- You may be able to lock in potential gains
- The potential for tax-free* income
- NO excess fees for pulling money out before age 59 1/2
Legacy Benefits
IULs also offer unique benefits when it comes to your legacy. Being able to leave money to your beneficiaries is, of course, the main purpose of life insurance. When it comes to IULs, your benefits may include:
- The death benefit may be higher than the premium payments you make
- Death benefit can increase over time
- Death benefit is tax-free*
- No probate court: The money goes directly to those who you want to receive it
- The benefit can be paid over time, or as a lump sum
Could Life Insurance Factor into Your Retirement Strategy?
An IUL is not the appropriate strategy for all retirees. Everyone has a different situation and different needs. An IUL might not be the best choice for you. But, if any of the following situations apply to you, then it may at least be an option worth considering:
- You are already maxing contributions to your 401(K), IRA, or other retirement account
- You are interested in tax-deferred or tax-free* strategies
- You’d like to have easy access to at least some of your funds
- Safety of principal is very important to you
- Stable income is important to you
- The income amount needed is less than your life insurance’s “cost basis”