Life Insurance And Retirement Annuities
Life Insurance And Retirement Annuities
Life insurance and retirement annuities both have similar concepts. That is, providing funds to those you’ve left behind. But, life can insurance can give you more than simply a death benefit. For example, an indexed universal life (IUL) policy may be a way for some retirees to gain tax-free* income. In addition, there are times where an IUL may protect some of your assets. Though not for everyone, an IUL is one option that retirees may consider.
Another reason some people look into IULs: potential return. If you have funds in a low-interest CD or money market account, for example. In this case, an IUL may be another choice. However, there are many other investment types each with its own set of rules. At Marathon Group Financial, we know how critical it is to tailor financial products to each individual client. Life insurance and retirement annuities may be part of a retirement plan for some.
Using life insurance in retirement planning is a factor for some retirees. Due to tax-free income, an IUL may have benefits for certain situations. Keep in mind, and IUL is simply an insurance policy. Therefore, its premium has different rules about taxes. In addition, it has different ways to use the money than investments do. In other words, the money you put in may be available to you differently than in other financial accounts.
If you currently have a 401(k) or a traditional IRA, for example, your withdrawals are subject to taxation. Also, upon reaching a certain age, you may need to take out money from those accounts. This required minimum distribution, also known as RMD, is important because if you don’t take the money out in the correct percentage by the correct time, you could see a heavy fine. Instead, some retirees choose to convert some of their retirement account money over to an IUL slowly. In this way, you may be able to take money out from your IUL without an income tax on those dollars.
When you are near (or, in) retirement, things begin to change. Typically, retirees begin to seek more secure places to put their money, instead of having risk in the market. Your life insurance needs may also change. Earlier in working years, life insurance may have been protecting an income for your family. Perhaps in retirement, this need seems not as urgent. However, your current life insurance policies may be able to convert to an IUL or other types of plans. Each situation is different, so be sure to reach out to see what you may be able to do with your current policy.
Protecting family will always be important, of course. But, retirement comes with new challenges that could change your initial plans. For example, tax issues may change. Therefore, the type of life insurance you choose and may matter more now. This is why Marathon Group Financial takes our time with clients. We explain the details of life insurance and overall retirement options. Life insurance and retirement annuities may, indeed, go hand-in-hand. An indexed universal life policy can sometimes be an option for part of the protection plan in retirement.
Retirement Life Insurance Potential Benefits
Here’s a shortlist of some reasons to take a look at an IUL:
- Protection of cash value, even in a down market
- An index, not the stock market, links to IUL
- You may be able to lock in potential gains
- Possible diversity of indexes
- Tax-Free* income potential
- Take out money, possibly tax-free*
- Flexibility to fund all at once or slowly over time
- No excess fees for pulling money out before age 59 1/2
Also, IUL’s may provide certain benefits after your lifetime as well.
Some of these benefits may include:
- Death benefit may be higher than the premium payments you make
- Benefit upon death is not subject to income tax
- No probate court
- Could be an income over time or a lump sum payment
- A possible option for using some of the death benefits for chronic or terminal illness
Marathon Group Financial does not believe in a “one-size-fits-all” plan. IULs have their place for some retirees, but not all. So, be sure to contact us to discuss your situation. We’re here to help you plan for your whole life.
