Depending on your financial plan and retirement income needs, one or more of the above options may be right for you. In some situations, after you have maximized your qualified plan contributions, a life insurance policy can provide an income tax-free death benefit to your beneficiaries9 and may also be an ideal complement to your existing retirement strategy as it can provide supplemental retirement income.
How It Works
Once you and your financial advisor decide that a life insurance retirement strategy is right for you, the first step is to select a life insurance policy. You retain all ownership rights and name the policy beneficiaries. You can then have your financial advisor structure the policy to accept maximum premium payments in relation to the desired death benefit so that, over the years, the policy cash values have the potential to grow to a substantial level.
In addition to providing an accumulated value that can be accessed to supplement retirement income, a life insurance policy also offers:
- A death benefit to your policy beneficiary(ies) that is generally income tax-free.8
- Tax-deferral on any cash value earnings. When your policy is properly structured, you can access your policy’s cash surrender value for supplemental retirement income, cash emergencies or other financial needs generally income tax-free.9
- The Individual - An individual purchases a life insurance policy insuring his life to provide the family with death benefit protection and a source of supplemental retirement income. The insured retains ownership of the policy.
- The Insured - At retirement, the insured/policyowner takes potentially tax-free income through withdrawals and policy loans from the life insurance policy’s cash surrender value.8,10
- The Heirs - In the event of the insured’s death, heirs can elect to receive either a lump sum, federal income tax-free death benefit9 or cash distributions over a specific number of years.
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Notes & Disclosures