It's one thing for an agent like me to tell you that life insurance can make a big difference in your retirement planning. It's another for you to see it in action.
Here's a case study that shows you exactly how a permanent life policy can offer you living benefits during your own retirement. If you're young and just starting to think about how to build your retirement nest egg, this case study should show you what a valuable tool life insurance can be.
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Get a Free QuoteThe Client
Jane Doe is a healthy 40-year-old woman who doesn't smoke and is in good health. She earns a Preferred Plus rating, which makes her policy more affordable and helps keep that annual premium low.
If she buys an indexed universal life insurance policy with an initial death benefit of $168,000, let's take a look at how that plays out for her over the years:
| Year | Annual Premium | Cumulative Amt. Received from Policy |
Approx. Cash Surrender Value |
Approx. Death Benefit Net of Loans/Withdrawals |
|---|---|---|---|---|
| 1 | $5,000 | $0 | $1,400 | $172,000 |
| 10 | $5,000 | $0 | $55,250 | $224,000 |
| 20 | $5,000 | $0 | $165,000 | $334,000 |
| 25 | $5,000 | $0 | $250,000 | $420,000 |
| 26 | $5,000 | $20,000 | $245,000 | $400,000 |
| 27 | $5,000 | $40,000 | $238,000 | $380,000 |
| 30 | $0 | $100,000 | $216,000 | $320,000 |
| 40 | $0 | $300,000 | $110,000 | $126,000 |
Take a look at that right-hand column. Her policy grows in value over the years because it's an indexed policy. That means it's tied to an index such as the S&P 500 to maximize the potential for growth.
That growth peaks in year 25, where you see the total value of her policy at $420,000. After this point, beginning in year 26, Jane starts pulling out money to help support herself during retirement. She pulls more each year through year 40 to help pay for all of the things she's dreamed of doing during retirement.
After 40 years of owning her policy, Jane has taken out far more than she's paid in, plus she still leaves a six-figure death benefit that will go to her beneficiaries tax-free. Not bad, right?
This video gives you even more reasons why you may need life insurance when you retire:
➡️ Ready to find out how affordable a new cash value life insurance policy can be? Click the button below to request a free quote!
Get a Free QuoteNote: The figures used in this case study are for illustrative purposes only. They are not guaranteed and should not be used to predict your own results. The rate of return in the example above is based on an allocation of premiums to an indexed account that credits interest based on the changes in an underlying index and is not necessarily indicative of future results. The net premium in the example is allocated to the Capped Indexed Account that credits up to 13% and has a floor of 0%. The hypothetical average annual rate of return assumed for the Capped Indexed Account is 6.5%.
The death benefit amount is calculated assuming that no policy withdrawals and/or loans are taken prior to age 66. Policy loans and partial withdrawals may vary by state, reduce available surrender value and death benefit or cause the policy to lapse. In most cases, policy loans or partial withdrawals won't be taxable as long as you limit your withdrawal to the amount of premiums you've already paid. Consult all policy documentation or your agent for details.