Life Insurance
Life Insurance In Retirement
Benefits of Life Insurance
You may not think about the benefits of life insurance in retirement. But, certain life insurance products can actually help you in a number of ways. For example, an indexed universal life (IUL) insurance policy may be an efficient way to produce tax-free* income. Additionally, an IUL policy may offer some another place to keep their money once they have maxed out their retirement contributions. Additionally, life insurance is of course useful to help secure your legacy.
Can Life Insurance Provide Income?
Income possibilities are one of the lesser-known benefits of life insurance. This is especially true when it comes to an IUL. The basic purpose of life insurance is to provide income for your loved ones after you are gone. But, what you may be unaware of, is that life insurance can provide you with income while you’re still living.
An IUL could also be part of your retirement savings plan. For one thing, you may be able to make the money accessible during emergencies. Or, you can access the money for other large purchases, and leave the rest of your retirement savings accounts untouched. Of course, this all depends upon your own individual situation.
The point is, IULs and other life insurance products may be able to provide more than just a death benefit.
Types of Life Insurance in Retirement
You may have heard that there are a few types of life insurance.
Term Life Insurance
For example, there’s term life insurance, which is only held for a certain number of years. it pays a death benefit only if you pass away during the term of your policy. And, it typically holds no additional value.
IUL Insurance
IUL insurance, on the other hand, provides more benefits and options than a term life insurance or even a whole life insurance policy would. Furthermore, a max cash value IUL may provide further benefits, beyond just a payout when you pass away. For example, you may choose to take money from it yourself in the form of income. Technically, the income you take out is an overpayment of life insurance. Therefore, you may be able to take it without paying taxes on that withdrawal. You may also be able to borrow against your life insurance policy. What this means is, money is paid to you as a loan, not income. Therefore, you may receive it tax-free.*
When Is Life Insurance the Answer?
An IUL is not the solution for every retiree. There may be another solution for you, depending on your needs and goals in retirement. Here are some conditions in which an IUL may be the solution for you.
Conditions:
- You have maxed out your 401(k), IRA, or other plan
- You’d like to have easy access to some of your money
- Stable income matters to you
- You are curious about tax-deferred or tax-free* strategies
- As a parent of a special needs adult child, you may need income for your child
- The income amount needed is less than your life insurance’s “cost basis”
Tax-Free* Income
American Principal is driven to help our clients learn as much as they can about their possible options. Life insurance is an important part of that. Work with us, to learn which options are right for you. Reach out, to attend one of our no-cost educational seminars, or meet us for a one-on-one, no-obligation meeting and review.
