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Life Insurance for Retirement

You probably have a basic idea of the main purpose of life insurance: provide money to those you love once you are gone. But, life insurance can actually do much more than just a death benefit. This is especially true if your policy is an indexed universal life (IUL) insurance plan. In fact, IULs can provide tax-free* income. Therefore, an IUL may be a good consideration as life insurance for retirement. You can also help protect your wealth with an IUL.

In addition, if you have any money in low-earning CD’s or savings accounts, an IUL might help. In the long run, an IUL may provide a reasonable rate of return. So, using an IUL as life insurance for retirement can be a possible addition to your retirement plan. Also, do you want to leave a legacy? Some retirees consider an IUL for this purpose as well. Tax-free* income for you and tax-free* death benefit to those you leave behind. Those are just two of the reasons you may consider an IUL. In fact, you may be able to transfer cash value from a different type of life insurance, such as whole or universal life plans. Reach out to us to learn the details and find out which options are available for you.

IUL Retirement Strategy

Of course, an IUL is not right for everyone. But, depending upon your situation, it may be part of your retirement plan. One reason it may work for you is due to the tax-free* income an IUL can provide. Keep in mind, and IUL is an insurance policy. As such, its premium (the money you buy it with) is not subject to the same taxes as an investment is. Money in retirement accounts has different rules than an IUL. In that respect, an IUL can offer a tax-free* alternative.

With traditional retirement accounts, such as 401(k)s or IRAs, you pay tax when you take money out. In addition, you must take a minimum amount of money out of those accounts each year once you reach age 70 1/2. (Note: For some retirees, this takes effect at age 72.) This minimum amount is your Required Minimum Distribution (RMD) and you must pay tax on those withdrawals. However, with an IUL, not such RMDs exist, Therefore, some people look to slowly move some of their retirement account money into an IUL. In this way, you may be able to take advantage of tax-free* income.

group of seniors with arms around each other laughing life insurance for retirement roseville ca
Choosing The Right

Life Insurance For Retirement

Investments with risk may be fine when you're younger. But, once you hit retirement, the game changes. You may now wish to secure your money, rather than risk it in the market. Life insurance goals may change as well. Earlier in life, you might use a life insurance policy merely for the death benefit. Perhaps you had a policy just to make sure your family had income should anything happen to you. However, when you have retirement savings built up, the death benefit may seem less important.

But, retirement also brings new financial concerns. These include tax implications and looking at estate planning. Each strategy serves a certain purpose. With the right type of life insurance, you can address certain retirement and wealth preservation concerns. Cornerstone Wealth & Tax Advisory has decades of experience in the insurance industry. We are here to help you protect your wealth and your legacy. With an IUL, for instance, you may be able to reach both of these goals.

senior couple having picnic in the park life insurance for retirement roseville ca

The Benefits

So, why would a retiree have life insurance for retirement? Here are some benefits that may be available via certain IUL offerings:

  • Protection of Cash Value from Market
  • Use of Index Instead of Stock Market for Potential Indexed Interest
  • Possibility of Locking In Potential Gains
  • Flexible Index Choices
  • Collect Income, Tax-Free*
  • Access to Both Principal & Potential Interest
  • 100% Fund Up-front or Over Time
  • Early Withdrawal Has No Penalties

Choosing The Right Life Insurance for Retirement

What about those you leave behind when you pass on? What happens if you become terminally ill? Here are some unique legacy benefits of an IUL:

  • Your Total Premium Paid is Less Than Death Benefit
  • Tax-Free* Death Benefits
  • No Probate - Direct Payment to Beneficiaries
  • Payment to Beneficiary In One Payment or Spread Out
  • Possible Death Benefit Increase Over Time
  • The Choice to Accelerate a Portion of Death Benefit for Terminal or Chronic illness
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At Cornerstone Wealth & Tax Advisory

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Doug Clancy DBA CSWTA Insurance Solutions • CA Ins Lic # 0G20617

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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.

Investment advisory services are offered through Gibbs Wealth Management, LLC (DBA Cornerstone Wealth & Tax Advisory Group), a SEC Registered Investment Advisor. Insurance products and services are offered through: Douglas A. Clancy Jr. DBA CSWTA Insurance Solutions, CA Ins. Lic. # 0G20617 . Gibbs Wealth Management, LLC (DBA Cornerstone Wealth & Tax Advisory Group) and Cornerstone Wealth & Tax Advisory Group, are unaffiliated companies.

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