Are you confident in your retirement plan...or are there some questions left unanswered?
If you're not sure about the financial path you're on, life insurance can help. There's one kind in particular that can really give your retirement a boost. A permanent life insurance policy builds cash value over time that you can use to help pay for your golden years. Sound too good to be true? Let's take a closer look.
What's In It for Me?
Most of my clients come to me with two main financial worries. They don't know if they're saving enough for retirement, and they worry about what would happen if they passed away, leaving their family without enough money to get by. Permanent life insurance helps alleviate both of those worries:
- Death benefit protection. You don't have to worry about your family's financial security should anything happen to you before retirement. The death benefit is 100% income-tax-free, which means your loved ones get the cash they need to pay the mortgage and put food on the table. If you have bigger bills or kids to put through college, selecting a larger death benefit amount can make these financial needs a reality.
- Supplementary retirement funds. Because permanent policies grow cash value, they give you an additional source of potential retirement income. The earlier you get your policy, the more cash value accrues. Unlike the stock market, that value can only go up. You have what's called "downside protection," which means you can benefit from gains in the market without losing if it takes a turn for the worse.
Case Study: Jack and Jill
Jack is 45 years old. He's a vice-president at an advertising agency. His wife, Jill, works part-time at a local daycare. They have two kids in middle school, ages 11 and 13. Jack makes pretty good money, but he's worried about what would happen if he died. The kids both need to go to college someday, and even if Jill worked full-time, she probably wouldn't be able to pay all the bills. He knows he needs to save money for them to fall back on...but how is he supposed to do that and fund a retirement account at the same time?
The first thing I'd suggest to Jack is an indexed universal life insurance policy. Here's how this decision would help him:
- Guaranteed death benefit. If anything happens to Jack, Jill and the kids get a tax-free cash payout to handle all their expenses. If Jack dies of old age, the life insurance payout doubles as an inheritance for the kids.
- Flexible payments. Life insurance isn't a qualified plan, which means it's not subject to the same contribution limits as, say, a 401(k). Jack can contribute more to his policy than he could to a 401(k), giving that cash value lots of room to grow...on a tax-deferred basis, of course.
- Tax-free withdrawals during retirement. Once Jack and Jill retire, they can take loans and/or withdrawals to access their cash value. They won't pay income tax on that money since they bought the policy with after-tax dollars.
- Hassle-free access. What if Jack needs an infusion of cash before age 59 and a half? If he tried to pull from a traditional retirement account, he'd be penalized to the tune of 10% plus income tax. It's a lot easier with life insurance cash value. There are no penalties for early access and no required minimum distributions, ever.
If you want to protect your family and save more for retirement, permanent life insurance may be right for you. There are many additional benefits life insurance can offer you and your family. I can go over all of them with you and answer any questions you have.