3 Smart Ways to Fund Your Retirement Using Life Insurance

As you start to age, it becomes exceedingly important to prepare and plan ahead for a solid retirement plan. It helps you to be able to secure a financial future for you and your loved ones, keeping up the lifestyle you are used to.

Everyone also realizes the importance of life insurance, which can help to replace income in the case of a premature death as well as act as an investment for future gains. Most individuals consider life insurance as an investment for beneficiaries, and where income replacement is the only end goal, it makes more sense to invest in a term plan.

Only lately are a large number of people realizing the potential of investing in permanent life insurance as a part of their retirement savings portfolio, in order to continue earning against or being able to withdraw from the cash reserves. Investing in life insurance for retirement is not for everyone, but let’s look at how it could work for you.

Here are the 3 ways you may be able to fund your retirement through life insurance:

• Permanent life insurance plans offer withdrawal benefits against the accumulated cash reserve

  When it comes to permanent life insurance, whether universal, whole life, variable or hybrid, individuals applying for it must be wealthy enough to support much higher premiums as opposed to the premiums of term insurance plans.
  People planning to invest in term insurance policies can get the maximum benefits from their policy if they over-fund it in the earlier stages of their life. This helps to build huge cash reserves on the side which can be used to withdraw cash against the cash reserve later, as long as they are repaid to avoid depleting the death benefit.
  Of course, borrowing more than the surrender value could end up lapsing the permanent policy altogether. Another benefit of investing in permanent life insurance is the tax advantage that comes with it, which enables distributions made through the withdrawn cash to be 100% tax-free.

• Tax advantages of other investments compared to that of permanent insurance policies

  Unlike brokerage accounts, using IRA’s and 401(k)s make for optimal retirement plans as they have the potential to offer tax advantages. IRA’s as well as 401(k)s are also advised as appropriate retirement-related investment options for the flexibility they offer to individuals in numerous options and varying costs.
  It holds true that cash value accounts do not hold as much potential for growth when compared to IRA’s and 401(k)s, but then again the term policy won’t go crashing if the market does, unlike IRA and 401(k)s.
  Permanent insurance plans come with high costs that range from fees to premiums, costs of commission, subaccounts and marketing, all of which makes for hefty amounts payable. It’s pretty clear why you should consider investing in permanent life insurance policies, secondary only to IRA’s and 401(k)s, for they too have tax advantages albeit at a higher cost.

• Contribute to the retirement plans through insurance and other investments to gain an edge

  Ideally, life insurance policies should be considered as investments made with the vision to protect your family or the business you own (or even both), against unexpected losses that may arise. That said, individuals with a lot of accumulated wealth stand to gain plenty from investing in permanent insurance plans once they have maxed out other possible options like IRAs and 401(k)s.
  The gains from investing in permanent life insurance plans can work wonders if the investor is wealthy, since they have the potential to offer huge tax savings. Hence, they should be considered, but only when you’re at the peak of your earnings.

Finally, how do you decide which plan is best suited for the retirement goals you envision for yourself and your family?

Well, scout around, get in touch with an expert and ask hundreds of questions if need be. Once you’ve compared all your options, you’ll be confident that you took all the steps necessary to find the perfect insurance policy, and got one that works for your financial benefit and security, both today and tomorrow!