Life insurance can be a valuable tool for planning for retirement if your situation allows it. A life insurance retirement plan (LIRP) is simple in theory. LIRPs are essentially overfunded policies, that is, amounts greater than the premiums required to keep the policy in force. 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. There are many different paths you can take to prepare for retirement. While life insurance plans are primarily designed to help you recover financially if you lose a loved one, they can also be used to help save retirement income.
1.If you're already contributing the maximum amount to your 401 (k) or IRA, you may be ready to start using a permanent life insurance plan as a retirement strategy. Specifically, the cash value portion of a full life insurance plan can help supplement your current retirement savings. There are a handful of situations where a retirement plan with life insurance can be especially beneficial. If you're a high-net-worth person who has made all the allowable contributions to your tax-advantaged accounts, such as 401 (k) plans or individual retirement accounts, you could use a full life insurance policy to top up your savings with deferred taxes.