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Life Insurance For Retirement
You likely have at least a basic idea of the main purpose of life insurance. It provides money to your loved ones once you’re gone. However, life insurance can actually do more than just provide a death benefit. This is especially true if you have an indexed universal life (or IUL) insurance policy. IULs can provide tax-free* income and can help protect your wealth. Needless to say, they’re certainly worthy of consideration as a life insurance policy for retirement.
An IUL might also help if you have any money in low-earning CDs or savings accounts. An IUL could provide a reasonable rate of return in the long run. So, using an IUL as life insurance for retirement could be a possible addition to your retirement strategy. Do you want to leave a legacy? Some retirees consider an IUL for this as well. It provides tax-free* income for you and tax-free* death benefits for your beneficiaries. You may also be able to transfer cash value from another type of life insurance play. Reach out to us for more information.
The IUL Retirement Strategy
An IUL isn’t the right policy for everyone, obviously. Although depending on your situation, it could be part of your retirement strategy. It could work for you because of the tax-free* income it can provide. An IUL is an insurance policy, after all. As such, its premium (the money you use to purchase it) isn’t subject to the same taxes that an investment would be. Money in retirement accounts has different rules as opposed to an IUL, and in that regard, an IUL can offer a tax-free* alternative.
With traditional retirement accounts like IRAs or 401(K)s, you pay taxes on the money once you take it out. You must also take a minimum amount of money out of those accounts each year once you reach the age of 7 1/12 (or for some retirees, this actually takes effect at 72.) This minimum amount is your required minimum distribution (or RMD) and you must pay a tax on those withdrawals. With an IUL, though, such an RMD doesn’t exist. Some people look to slowly move some of their retirement account money into an IUL. This way, you might be able to take advantage of tax-free* income.
Choosing the Right Life Insurance For Retirement
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Why would a retiree have life insurance for retirement? Well, here are some benefits that could be available via certain IUL offerings:
- Protection of your cash value against the risk of the market
- use of index instead of the stock market, for potential indexed interest
- Possibility of locking in potential gains
- More flexible index choices
- Access to both principal and potential interest
- Collect income, tax-free*
- 100% funds, up-front or overtime
- Early withdrawals don’t come with any penalties
Now, what about those you leave behind when you pass on? Here are some unique legacy benefits of an IUL:
- Your total premium paid is less than the death benefit
- The death benefit is tax-free*
- Direct payments to beneficiaries, with no probate
- Payment to the beneficiaries can come in one payment, or spread out
- Possible death benefits increase with time
- the choice to accelerate a portion of a death benefit in case of terminal or chronic illness
Here at Turney Financial Group, LLC, we want you to have all the information you need. It’s your retirement and your choice. We’re just here to inform and assist. Attend one of our events or view one of our online webinars to learn more.