More Than Just A Death Benefit

Life Insurance For Retirement Strategies

Tower Bridge Financial focuses on one thing: Protecting our client’s retirement.

You’ve worked hard to earn your money. Now, you can learn how to preserve it and have an income for life. When you’re ready for that next step, we’re here to help. Join us at a seminar or call us to schedule your appointment today.

couple running together life insurance for retirement savings folsom ca

Life Insurance

You probably have a basic understanding of what precisely life insurance is for. It can help provide for your loved ones when you are no longer here. But, life insurance is about more than just a death benefit. Actually, an indexed universal life (IUL) policy can be utilized as a way for tax-deferred income. Also, an IUL can provide some retirees with a way to keep their assets secure while receiving a reasonable rate of return. While IULs are not for everyone they are one option retirees can examine.

A second reason some retirees consider IULs is the potential for returns. One example is if you have money that is placed in a money market account or a low-interest CD. In this case, an IUL may be a better option. 

Additionally, retirees can use an IUL for potential death benefits. For example, any money left to your beneficiaries is tax-free* for the recipient. That is because your money that is paid out to them is from the cash value of an insurance policy, not an investment account. Also, with an IUL policy, as your beneficiary, your loved ones will not have to go through probate to gain access to these funds. 

At Tower Bridge Financial, we know how significant it is to tailor financial products to each client. Life insurance and retirement annuities could be part of a retirement strategy that is right for you. Reach out to our team today to learn more.

How To Use Life Insurance In Your Retirement Strategy

When it comes to retirement everyone’s situation is unique. It may be worth looking into the specifics of an indexed universal life insurance policy. 

First off, an IUL offers tax advantages with the potential for tax-free* income. It is important to remember that an IUL is an insurance product. That means the premium or the money you have contributed) has a different set of rules than the money you invest in the stock market.

For example, if you already have retirement vehicle like a traditional Roth IRA or a 401(k), you pay taxes on withdrawals. Additionally, when you reach a certain age, you are required to withdraw funds and pay those taxes. This is called a Required Minimum Distribution or RMD. If you are searching for a way to convert this money into tax-free* money, you may consider an IUL. Specifically, some retirees choose to convert some of their retirement income slowly into an IUL. This way, you may be able to withdraw money from your IUL without paying the income tax on those funds.

Life Insurance For Retirement:
What Are The Benefits?

Retirees that use an IUL as part of their retirement strategy can receive many benefits. Many of these benefits can help you during your retirement years like:

  • With an IUL policy, you can protect your cash value, even in a down market
  • A stock market index provides you with a potential for cash value growth
  • You may be able to lock in potential interest
  • Potential for choice of the number of indexes you want for your IUL
  • The potential for tax-free* income
  • Principal and interest are available, tax-free*
  • Flexibility to fund all at once or slowly over time
  • No excess fees for pulling money out before age 59 ½

Life Insurance: Benefits For More Than Just Your Lifetime

Additionally some IUL’s offer some unique benefits where your legacy is concerned. After your death your beneficiaries benefits may include:

  • The death benefit may be higher than the premium payments you make
  • Tax-free* death benefit
  • No probate court – the money goes directly to who you want to receive it
  • The benefit can be paid overtime or as a lump sum
  • Death Benefit can increase of time
  • A potential option for using some of the death benefits for chronic or terminal illness

Life Insurance: The Right One For You

It doesn’t matter if you are currently in retirement or are drawing close to retirement age. As we near retirement our needs change and that means so do our products. Typically, retirees start to seek more secure alternatives for their money, versus having too much potential for risk. Usually, this change applies to life insurance as well. During your working years, you may have had an insurance policy to provide for your family if you couldn’t. Now that you’ve built up income for your retirement, this might be a secondary goal. 

However maintaining, protection for your family is still an important piece of the puzzle. But retirement introduces additional challenges that could impact your initial goals, including tax implications. Meaning that the types of life insurance policies you choose are just as important as ever.

senior man on sail boat using life insurance for retirement income folsom ca

**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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