Having a steady stream of tax-free income from your policy is a great way to supplement your retirement income. In the event of death, a life insurance retirement plan provides income protection in case you can no longer provide that retirement income to your loved ones. Does it make sense, then, to use life insurance as an investment? The answer is absolute in some limited cases. Internal Revenue Service.
Publication 590-B, Individual Retirement Plan (IRA) Distributions. U.S. Variable Life Insurance UU. Retirement issues: beneficiary.
Abusive trust tax evasion schemes: special types of trusts. Regardless of the life insurance policy, your retirement must continue to be funded through a specific retirement account, such as a 401 (k) or an IRA. Comprehensive life insurance and indexed universal life insurance are the best life insurance retirement plans because of their savings component, called cash value. My goal is to help you take the guesswork out of planning for retirement or to find the best insurance coverage at the lowest rates for you.
Term life insurance has no cash value and cannot be used for a life insurance retirement plan. Regardless of the type of life insurance policy you decide to purchase, exclusive retirement accounts, such as a 401 (k) or an IRA, should continue to be the primary way to finance your retirement. Term life insurance, which does not have a cash value component, cannot be used for a life insurance retirement plan. However, when it comes to creating a retirement plan with life insurance, investors may want to consider alternatives.
While it's a life-changing occasion and is naturally stressful, it should be an easy transition from working life to retirement life, since you've been planning for this moment for what should be the last 40 years. Read on to see if buying this type of insurance makes sense for your retirement strategy and how life insurance compares to a 401 (k) plan or an individual retirement account (IRA). If you've already maxed out your other tax-advantaged retirement savings plans, LIRPs can be a good alternative to getting a tax-free income stream in retirement.