6 Arguments for Life
Insurance as a Retirement Vehicle
look at 6 arguments for life insurance as a retirement vehicle.
Permanent life insurance (indexed universal life) builds a cash
value over time that grows tax deferred, similar to the qualified
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
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
Juan Pablo Blanco, Grady Elliott and the Rest of the
Smeed Financial Team
201 Sand Creek Rd. Ste. E
Brentwood, CA 94513