6 Arguments for Life Insurance as a Retirement Vehicle

Letís look at 6 arguments for life insurance as a retirement vehicle.

1. Permanent life insurance (indexed universal life) builds a cash value over time that grows tax deferred, similar to the qualified retirement accounts.

2. If you die prematurely, life insurance provides a tax-free payment to your beneficiary. With the qualified plans, if you are unmarried, your 401(k) is often taxed as regular income to your beneficiary in the year received, which can be a huge tax burden.

3. The cash value that builds in permanent insurance is an asset that can be accessed free of income taxes or penalties at any time. These cash can be used for any purpose, such as college expenses for your kids, car repairs, vacations, etc. Funds in qualified retirement accounts normally cannot be accessed prior to age 59 1/2 without incurring a 10% penalty and income taxes.

4. There is no limitation on Premiums for indexed universal life insurance. In many tax qualified retirement savings plans, there are limitations to how much you can deposit.

5. The cash value in a life insurance policy can grow without any requirement to take money out. This allows for flexibility to take the money when you want. In qualified plans, you are required to take out a minimum amount beginning at age 70 1/2 and every year thereafter.

6. When you use the cash value for an income stream in retirement, you will receive the money free of income taxes. When using a qualified plan for retirement, the income is fully taxable by the state and federal governments. Some people think that the tax deferred status given to their deposits is a big deal but, if you do the math, youíll find that the taxes saved prior to retirement are often paid back in less..

As always, we are available for any questions or concerns you may have. So feel free to call or email us at 925-757-6018 or send me an email at jblanco@smeefinancial.com


Juan Pablo Blanco, Grady Elliott and the Rest of the Smeed Financial Team
201 Sand Creek Rd. Ste. E
Brentwood, CA 94513




SMEED CPA, Inc | 201 Sand Creek Road, Suite F | Brentwood, CA 94513
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