How To Use
Life Insurance in Retirement
Life insurance has a number of other benefits besides leaving money for your beneficiaries upon your passing. Have you considered how life insurance in retirement may be a source of income to sustain your lifestyle? Also, life insurance can be used to provide financial protection while receiving a reasonable rate of return.**
**Our products offer a reasonable rate of return, over time.
Your Retirement Strategy and Life Insurance
Based on your situation, an indexed universal life (IUL) policy may have a place in your retirement strategy. One of the benefits of an IUL is tax advantages with the potential for tax-free* income. This is because an IUL is an insurance product. Therefore the amount you contribute has different rules than the amount you put in the stock market.
As an example, if you have traditional IRAs or 401(k)s, you pay taxes on withdrawals. As you reach certain age milestones, you will need to withdraw X amount of money and pay the tax. This is called a Required Minimum Distribution (“RMD”). Because of this, an IUL policy might interest you. You could gradually convert some of the money in your retirement account into your IUL. In this case, the funds could be obtained tax-free* from your IUL policy.
Let’s Talk Life Insurance Benefits
The following are a few advantages that an IUL can have for your retirement strategy:
- Market losses do not reduce the cash value of the IUL
- The growth of an IUL’s cash value is determined by a stock market index
- The ability to secure what you accumulate
- Flexible diversification options for your IUL indexes
- Tax-free* growth in cash value
- Access to both principal and interest is tax-free*
- You can fund it all at once or over time
- No fines or fees for accessing funds under age 59 1/2
Benefits For Protecting Your Legacy
An IUL offers the following benefits should you pass away:
- Total premiums paid are less than the death benefit
- Death benefits are tax-free*
- Beneficiaries receive direct payments: No probate
- Payment to beneficiaries in one lump sum or in installments
- Death benefits potentially increase with time
- A portion of death benefits for terminal or chronic illnesses can be accelerated
Choosing The Right Life Insurance In Retirement
Whether you are retired or are about to retire makes no difference. People’s financial needs may change when approaching retirement or while in retirement. Over time, retirees tend to seek out more secure alternatives for their money versus assuming too much risk. In most cases, this change also applies to life insurance. While you were working, you may have had a policy to provide for your family if you weren’t able to. Now that you have saved retirement income, this goal may be secondary.
It is still important, however, to protect your family. As you near retirement, you face additional challenges, such as tax implications. Choosing the right life insurance in retirement is just as important as ever. With an IUL, it’s possible to achieve both of these goals. Hybrid Financial is committed to helping you protect your wealth and legacy.