Life Insurance In Retirement

Your Options

You have at least a basic idea of what life insurance does: Its primary purpose is to provide for your loved ones after you are gone. However, life insurance can potentially provide much more than just a death benefit. An indexed universal life (IUL) insurance policy, for example, can actually be used by you while you’re still alive, as a tax-free* income source. Life insurance in retirement can be used to protect some of your assets while earning a reasonable rate of return** on them.

If you have money in low-earning accounts such as CDs, an IUL may help you see a better rate of return.** Using life insurance in retirement can also provide benefits specific to your beneficiaries. For example, the death benefit is tax-free,* and reaches them while avoiding probate court. If you’re interested in the benefits offered by this product, reach out to us. Life insurance in retirement might be the right choice for you. Attend an educational seminar event to learn about your options, or schedule a one-on-one meeting with us to discuss your situation.

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A Great Source of Income

IUL For Retirement

Life insurance may be a great source of retirement income, depending upon your individual situation of course. One reason for this is that insurance policies follow different rules than typical retirement plan accounts do.

For example, they apply to different tax rules: If you currently have a retirement plan account such as a traditional IRA or 401(k), you pay taxes on your withdrawals. And, when you reach a certain age, you must take required minimum distributions and pay those taxes. In contrast, you can take income tax-free* from an IUL policy. Additionally, you may be able to slowly convert some of the money from your current retirement accounts into an insurance policy instead. If you’re looking to lessen the burden of taxes on your retirement income, an IUL may be of use to you.

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A grandmother enjoying life insurance in retirement by spending time with her granddaughter in the kitchen.

Benefits of Life Insurance In Retirement

Using life insurance in retirement comes with numerous benefits. Firstly, there are the features of these policies that help you during your retirement:

  • The cash value of your IUL remains protected in the event of a market downturn
  • Cash value growth based on the performance of a market index or indexes
  • Fund your policy all at once, or over time
  • Tax-free* growth
  • No fees or fines for accessing the money before reaching age 59 1/2
  • Tax-free* access your principal & any interest

Then, there are benefits available to your heirs after you are gone:

  • Immediate death benefit (avoids probate)
  • Death benefit can be received as a string of payments, or as one lump-sum
  • The death benefit can be much greater than the premium paid
  • Tax-free* for the beneficiaries
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*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security.  All figures herein are hypothetical and for illustrative purposes only to explain general concepts.  No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

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This site is for informational purposes only and is not intended to be a solicitation for or offering of any product or investment. The offer for sale of an insurance product may only be conducted in a state where the agent is licensed and the product is approved for sale. The providing of investment advice relating to securities may only be done by a properly licensed individual operating through a licensed affiliate entity, unless otherwise exempt. Comments about past performance are not to be construed as a guarantee or assurance of future performance. This website may contain concepts that have legal, accounting and tax implications. We do not provide specific legal or tax advice, nor promote, market or recommend any tax plan or arrangement. Consult a tax/legal professional for guidance with your individual situation. No representations are made as to the accuracy or completeness of the information contained herein or any information contained in any link provided herein, nor does a consumer visiting the web site create an agent-client relationship.

By contacting Steve Redelsperger/Redelsperger Financial Group, you may be offered information regarding the purchase of insurance products, including fixed index annuities and life.