Skip to main content

Stay updated on all areas of tax filings and business processes affected by COVID-19.  Learn More.

Life Insurance as a Retirement Plan?

Yes, your read the title correctly.  Now, first things first, I’m NOT a life insurance specialist, but my industry works closely with a wide range of specialists in the retirement, estate planning, legal, and investment fields. 

One of the things I always try to do is to understand how taxpayers can improve their retirement strategies – especially when it’s not going to be taxed in the traditional sense. 

Yes, life insurance can do just that, but not just any old term policy. 

We’re talking Whole or Universal Life Insurance policies that have cash value associated with them.

The idea behind it is pretty simple – you have a policy that is worth a certain cash value in the event of your death and you pay a specific amount towards that policy each month.  When you die, your estate can use that money to do whatever it deems appropriate to settle your accounts, bury you, take care of your family, whatever. 

But what if, instead of paying the minimum each month, you paid more. 

Ten, twenty, thirty percent more?  Month after month, year after year.   Where would that money go? 

It turns out, it goes right into that account.

So maybe your $100,000 whole life policy could have $126,487 in it. 

Guess what?  Before you die, you can borrow that difference (in this case, $26, 487) and not have to pay it back. 

In most cases, tax free. 

And, when you inevitably pass away, your policy is still worth $100,000.

Is there a catch?

Of course!  The catch is, if you’re using life insurance as a retirement vessel, you have to have a LOT more than $26,487!  Statistically, that might not even make it through a year for many retirees. 

So you have to have the extra capital to be able to put into these sorts of tools. 

I can’t sell you a life insurance policy, but I can help you find those extra funds.  So do me a huge favor – if this appeals to you, let’s sit down and talk about how we can help you save on taxes week to week and give you the ability to make these kinds of investments.  It’s really a no-brainer, but so few people know about it, I love sharing it.