Benefits of Life Insurance For Retirees

A Tax-Free* Retirement Option

The team here at Safe Harbor Retirement Solutions is focused on one thing: Protecting our client’s retirement. You’ve worked hard to earn your money. Now, you can learn how to keep it safe from potential losses, while creating potential income for life. When you’re ready for that next step, we’re here to help. Join us at a seminar or call us to schedule your appointment today.

You Might Be Wondering...

How Does Life Insurance For Retirement Work?

When you start planning your retirement, you’re probably not thinking that life insurance could play a role in your retirement tax planning. And why should you? Life insurance is not an investment, and that means it follows different tax laws. For instance, with an indexed universal life insurance policy (IUL), you have the option to retire tax-free*. An IUL gives you access to your money through income payments. But, because it isn’t a retirement plan with money directly in the stock market, there is no tax on the income. Of course, each person’s financial situation impacts whether an IUL is the right choice for them or not. So, be sure to speak with a professional to see if an IUL is a right choice for you.

Types Of Life Insurance

There are several types of life insurance you can choose from. One option is term life insurance. Term life insurance is paid as a death benefit if you pass away within the terms of the policy. Also, this type of policy doesn’t hold any additional value. 

Indexed universal life insurance policies (IULs) are another category of life insurance products. Usually, an IUL may provide more options and advantages for retirees than a term or whole life insurance policy. 

Another type of life insurance policy is a max-funded cash value indexed universal life insurance policy. Most often this type of life insurance policy offers more flexibility than others. In addition to providing a death benefit, max-funded cash value life insurance policies have the potential to produce cash value. Some varieties of these policies will permit you to remove money from the cash value produced. You can withdraw this money tax-free* because the cash value is technically just an overpayment of life insurance. Also, some policies will allow you to borrow against your cash value. In this instance the money received is a loan, meaning you can collect it tax-free* as well.

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Let's Talk About the

Benefits Of Life Insurance For Retirees

Retirees that use an IUL as part of their retirement strategy have the potential to receive many benefits. Many of the following benefits can help you during your retirement years:

With an IUL policy,

you can protect your cash value, even in a down market

A stock market index

affords you with a potential for cash value growth

You may be able

to lock in potential gains

Potential for choice

of the number of indexes you want for your IUL

The potential for

tax-free* income

Principal and interest

are available tax-free*

Flexibility to fund

all at once or slowly over time

No excess fees

for pulling money out before age 59½

Life Insurance:

Benefits Beyond Just Your Lifetime

Additionally, several IUL’s offers unique benefits when it comes to your legacy. One large advantage of life insurance is that you get to leave a legacy. After your death your beneficiaries benefits may include:

  • The death benefit may be higher than the premium payments you make
  • Tax-free* death benefit
  • No probate court – the money goes directly to who you want to receive it
  • The benefit can be paid overtime or as a lump sum
  • Death Benefit can increase of time
  • A potential option for using some of the death benefits for chronic or terminal illness

As you get nearer to retirement age you may be questioning what are your tax-free* retirement options. Does a tax-deferred retirement even exist? Well, with the right retirement strategy, tax-free* income is possible. For example, indexed universal life insurance policies (IULs) may be a good option for those in retirement. Indexed universal life insurance policies allow access to your cash value without being taxed. This includes potential tax-free* income for your beneficiary, death benefits, and much more.

Most people know the basics when it comes to life insurance. The right life insurance policy can help ensure your loved ones are financially secure after your death. 

However, there is another way to use life insurance to your advantage, when it comes to retirement planning. Most people don’t realize that life insurance can provide income while you are still living. 

An indexed universal life insurance policy could be a key component of your retirement savings strategy. The funds from an IUL can be accessed during emergencies. Some retirees use the funds from an IUL to cover larger purchases or expenses. Or, maybe you want to use the funds for college expenses for your children and grandchildren. When you use the money from an IUL, the rest of your retirement savings account can remain untouched. However, it is important to remember that every policy and situation is unique so it is important to seek advice from a professional.

An indexed universal life insurance policy is not appropriate for all retirees. Depending on your situation and needs, there may be other solutions available. But in certain situations, an IUL may be the most suitable choice. Life insurance may be a good tax-free* income alternative for you if any of the following situations apply to you:

  • You are already maxing contributions to your 401(k), IRA, or other retirement plans
  • You have maxed your 401(k), IRA, or another plan
  • You are interested in tax-deferred or tax-free strategies
  • You’d like to have effortless access to some of your funds
  • Income security is important to you
  • As a parent of a special needs adult child, you may want income for your child
  • You like the notion of being able to withdraw cash whenever you need it
  • Stable income is important to you
  • The income amount needed is less than your life insurance’s “cost basis”

Life Insurance: The Right One For You

Safe Harbor Retirement Solutions is committed to making sure our clients are educated on what’s possible for their retirement. Life insurance could play a key role in your retirement strategy. Contact our team today for a no obligation retirement account and strategy review. We will review your current strategy during our one-on-one meeting, answer any questions, and make recommendations. Your legacy should be protected, and we are to help you do exactly that.

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