Life Insurance Retirement Plan
Should you have a life insurance retirement plan? That depends on your goals. Life insurance is one way that retirees can ensure those they love are taken care, no matter what happens to them. However, having a life insurance retirement plan means more than just a death benefit. For instance, an indexed universal life (IUL) plan offers a way to earn tax-free income during retirement. Also, an IUL may provide asset protection. Many types of permanent life insurance plans may be available for you to help reach your retirement goals.
IULs may also provide a return on your money. In some cases, the rates you get with an IUL are higher than what you might get in a CD or savings account. So, you still get a secure place for your assets but could see a better gain. Each insurance and investment has its own set of rules, of course. At Cornerstone Wealth & Tax Advisory Group, we make sure to tailor our solutions to your needs. A life insurance retirement plan is sometimes helpful with a long-term strategy.
Could life insurance help in your overall retirement plan? An IUL, for example, could provide a tax-free income option for retirees. As an insurance policy, and IUL has a "premium." The tax rules are different when it comes to insurance premiums. In fact, the ways in which tax code applies to investments differ from an IUL. When you put money into an IUL, you can access income without taxation.
If you take money out of a 401(k) or a traditional IRA, you will pay taxes. Additionally, when you reach a certain age, you must withdraw money from those assets. This is known as an RMD (required min. distribution). RMDs are, of course, subject to taxes as well. In fact, if you do not take out the correct amount of money by the correct day each year, you could pay a big tax fee. To avoid this, some retirees rollover their retirement money to an IUL over time. By doing so, the money taken out is no longer subject to taxation.
When Should I
Choose An IUL?
As you reach or enter retirement, your need for security may increase. Also, your life insurance needs could change as well. When you're in working years, life insurance needs to provide certain protections. However, in retirement, benefits such as tax-free income may become more important. Keep in mind, some insurance policies may be able to convert to an IUL or other plan. Be sure to contact us to find out which options are right for you.
Cornerstone Wealth & Tax Advisory Group takes the time to meet with clients and understand their needs. When it comes to a life insurance retirement plan, we can go over the details and answer questions about this approach. In addition, we believe that retirement planning and protection go hand-in-hand. Let's get together to make a plan that's right for you.
Why An IUL?
Here are some reasons you may consider an IUL in retirement:
- Even in a down market, your cash is protected
- IULs do not link to the stock market; instead, it uses an index
- Potential gains can be fixed
- You can choose from multiple indexes
- Income, tax-free
- Tax-free withdrawals
- Flexibility in how you get your money
- Not dependent upon your age
After you've lived your life, IULs can offer some "legacy" benefits, too, including:
- Possible higher death benefit versus payments made
- Death benefit with no income tax
- Probate court unnecessary
- Take income now or over time
- Chronic illness or terminal illness potential benefit