Life Insurance (for the living)

Most people understand life insurance as a benefit your loved ones will receive once you have passed away. It’s important to know that a life insurance policy can be much more than this. Insurance companies offer permanent life insurance with many additional benefits that you may not think of as part of a life insurance policy. If you are in the market for life insurance, it’s worth taking the time to understand how this works.

The death benefit offered by a life insurance policy is obviously a key part of a responsible financial plan, but expect more from your policy. Permanent life insurance has additional benefits to be used while living. Living benefits can come in many different options, such as policy cash value, optional riders, or supplementing retirement income.

Some other benefits included through life insurance companies are preparation for chronic illness, disability income, business planning benefits, college tuition savings plans, and planning for charitable donations. The death benefit is typically the most common sought after perk of such a policy, but knowing you have more options that can be enjoyed while you are living makes spending the extra money on protection more settling.

Take the time to understand what type of policy will bring you and your family the most benefit before and after your death. Making sure your family is protected and your money is being put to good use is going to bring you peace of mind which can be invaluable.

Planning for retirement

Are you one of the 83% of Americans who feel that they will not be able to retire comfortably? Saving for retirement is a shared concern among many — even for those who have maximized contributions to employer-sponsored plans and IRAs, and especially for those who have seen their existing savings decline dramatically due to market recession. Life insurance, in addition to providing a death benefit, can be an attractive vehicle for tax advantaged accumulation potential and a potential source of supplemental income. Accumulation within a permanent life insurance policy is tax-deferred, and you can access the policy’s cash value either through tax-advantaged withdrawals or policy loans to help fund your supplemental income needs. Life insurance in retirement planning can offer:

  • No pre 59 1/2 withdrawal penalty (for non Modified Endowment Contracts)

  • No Required Minimum Distributions (RMDs)

  • No Adjusted Gross Income limitations

  • Tax advantaged distributions through loans and withdrawals


Lifetime tax advantages of life insurance

The tax advantages of life insurance are also a benefit that you can experience during your lifetime:

  • Tax-deferred growth potential of cash value - any potential accumulation of policy values is not considered current by the IRS

  • No age-related tax penalties when using loans and withdrawls, provided the policy is not a MEC and is kept in force

  • Tax-free withdrawals to the extent of cost-basis and generally tax-free loans. You should carefully consider the value required to support your policy’s ongoing charges and the potential impact on the policy and any policy guarantees prior to taking a loan or withdrawal.