how to use

life insurance for retirement

It’s likely that you have at least a basic idea of the main purpose of life insurance: providing money to those you love once you’re 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 (or IUL) insurance policy. IULs can provide free tax* income, and can help protect your wealth, so are certainly worth considering as life insurance for retirement.

Additionally, an IUL might help if you have any money in low-earning CD’s or savings accounts.

An IUL may provide a reasonable rate of return in the long run.

So using an IUL as life insurance for retirement can be a possible addition to your retirement strategy. Do you want to leave a legacy? Some retirees consider an IUL for this purpose as well. It provides tax-free* income for you and tax-free* death benefits for those you leave behind. You may also be able to transfer cash value from some life insurance policies. Reach out to us for more information.

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The Roles of a

IUL Retirement Strategy

An IUL isn’t right for everyone, of course. But depending on your situation, it could be part of your retirement strategy. It may work for you due to the tax-free* income it can provide. An IUL is an insurance policy, after all. As such its premium (the money you purchase it with) isn’t subject to the same taxes that an investment would be. Money in retirement accounts has different rules than an IUL, and in that regard, an IUL can offer a tax-free* alternative.

With traditional retirement accounts, such as IRAs or 401(K)s, you pay taxes on the money when you take it out. You must also take a minimum amount of money out of those accounts each year once you reach age 70 1/2 (for some retirees, this actually takes effect at the age of 72.) this minimum amount is your required minimum distribution (or RMD) and you must pay a tax on those withdrawals. With an IUL, however, such an RMD doesn’t exist. Some people look to slowly move some of their retirement money into an IUL. This way, you might be able to take advantage of tax-free* income.


the Right Life Insurance For Retirement

Investments with risk might be fine when you’re younger, but the game changes when you hit retirement. You might want to secure your money now, rather than risking it in the market. Your 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. But now that you have retirement savings build up, the death benefit might seem less important.

Retirement also brings new financial concerns, such as tax implications and looking at estate planning. Each strategy serves a specific purpose. With the right kind of insurance, you can address certain retirement and wealth preservation concerns. Relayer Benefits Group is here to help you protect your wealth and your legacy. And with, say, an IUL, you may be able to reach both these goals.

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The Benefits

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

  • Protection of cash value from the risk of the market
  • Use of index instead of stock market for potential indexed interest
  • Possibility of locking in potential indexed interest
  • Flexible index choices
  • Access to both principal and potential interest
  • Collect income, tax-free.*
  • 100% fund, up-front or over time
  • Early withdrawal doesn’t have any penalties

What about those you leave behind when you pass on? Well, here are some unique legacy benefits of an IUL:

  • Your total premium paid is less than the death benefit
  • Tax-free death benefits*
  • No probate: Direct payments to beneficiaries
  • Payment to beneficiary in one payment or spread out
  • Possible death benefits increase with time
  • The choice to accelerate a portion of death benefit for terminal or chronic illness

At Relayer Benefits Group, we want you to have all the information you need. It’s your retirement and your choice, we’re just here to inform and help. Attend one of our events or view one of our webinars online to learn more.

*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.

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