FRIDAY, FEBRUARY 12, 2021
Should Your Life Insurance Fund Your Retirement Years
It’s time to think about retirement. While you may be focusing on beaches and never putting another suit on, you also have to consider your finances. Many people plan for retirement from the day they start their first job out of college. Perhaps you already have a retirement account in place. Should you, then, consider life insurance as just coverage for the unexpected? It may also help boost your retirement income later on. Here is why many use it.
Life insurance policies can do various things. Some policies are set for only a set number of years. You make a payment, the payment goes to the insurer, the death benefit is in place until you die. That death benefit, or payment, applies only when you, as the policyholder, die while the plan is in place. Once the term is over, there is nothing left behind. The policy expires unless you renew the policy.
Other life insurance policies, such as whole life coverage, provide ongoing protection. There is not a set term. The policy remains in place as long as you keep it there by making payments. As a result of this, the funds you pay do a bit more. A portion of those funds pays for the creation of the death benefit. However, additional funds go to your account. The insurance company invests them like you would for your retirement accounts. Over time, these investments build value. As they do, they may become income-earners for you.
What Happens During Retirement?
Let’s say that you retire and start drawing out from your whole life insurance policy. If the policy’s value is high enough, you may be able to receive payments for the earnings present. There are limitations here. For example, if the account does not perform well, you may have significantly less built up value. Yet, those funds are still available to you during retirement to use any way you like.
Also, consider the tax advantages. These funds are not an income to you. That means you do not have to pay taxes on them as long as they remain in the account. Talk to your tax professional about strategies that could help reduce these costs for you.
Consider the value of adding a life insurance policy to your retirement plans. It could create a steady stream of income for you. For many people, it can prove to be an ideal way to boost the ability to travel or live the life they desire.
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