Yes, You Can Use Your Life Insurance for Retirement
It is possible to use your life insurance to supplement your golden years? In what ways?
For many of us, a life insurance serves one primary purpose: to protect our loved ones from the financial burden of our sudden loss. It gives us peace of mind and assurance that everything will be okay for the people we love once we’re gone. But what happens when the people we are protecting finally reaches their own financial stability and we’re relieved of that anxiety?
What many don’t realize is that your life insurance can actually turn into a great financial tool you can use to maximize your retirement.
Here are some of the ways that your life insurance policy can help you during your golden years.
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It can supplement your retirement income
One of the great worries of many Americans approaching retirement is the possibility that they may not have saved enough. Indeed, more people are staying longer in the workforce just because they feel that their savings cannot support them yet.
With a life insurance, you can take advantage of policy loans and withdrawals to help you supplement your income, especially when your savings and investment accounts cannot suffice.
You may even find some policies that cover for long-term care. And by annuitizing your policy, you can expect a steady flow of income that can help relieve your cash flow and pay for important expenses.
Allows easy passage of benefits
It’s a flexible estate planning tool that allows you to easily pass your assets to your heir/s. The proceeds of your policy are free of taxes and can easily be paid directly to your beneficiaries via a lump sum. Another benefit of your policy is its flexibility of use for any desired purpose whether you want it to fund the payments of your estate taxes or ensure that your family business has enough funding, among others.
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It can maximize your pension
The conventional idea of a pension may not be in most people’s minds nowadays. This type of benefit is slowly fading in the Land of the Free. However, those who are still lucky to enjoy them can find comfort in the fact that they can use their life insurance to supplement their surviving spouse’s income, which will allow them to enjoy their life together while benefiting from higher, single-life pension.
This is because with a traditional pension, most seniors are faced with the choice of either taking higher single-life distribution or a lower amount so that they can extend their benefits to their surviving spouses. Your life insurance can eliminate that dilemma.
How to get there
If you want to redirect the purpose of your insurance policy (or policies), it’s time that you sit down with your agent or financial advisor about your retirement plans in a process called a policy review. This way, you can discuss the best course of action regarding your finances and how it can be restructured to suit your retirement goals.
If you’re not a current holder of any policy, it’s a wise move to start as early as now. Head over to our Life Insurance policy page to get a quick overview about everything you need to know regarding ever important financial arsenal.