You always knew that purchasing your life insurance policy was a smart decision. Covering your funeral
costs, and protecting your loved ones in case of an unexpected emergency were the initial reasons behind the
purchase, but did you know there are additional benefits you can receive from your policy?
With certain life insurance policies, you can even help pay for your own retirement. Aren’t you glad you
made this investment?
Right off the bat, one thing needs to be clarified: your life insurance policy should simply be used as a
supplement to aid in funding your retirement, you should not rely solely on these benefits for an extended
amount of time. You can borrow money from your policy, but you need to keep in mind that you have a set
amount saved up. Also, if you take out a lot of money, these are funds that are subtracted from your death
benefit. Therefore, you need to ensure that your reduced death benefit is still sufficient to cover the needs
of your beneficiaries when you do pass away.
With that said, you do have the freedom to take out funds as long as you have been paying your premiums
and have money invested in the policy to take out. If you choose to employ this method of supplementing your
funds for retirement, it is recommended that you wait at least 10 to 15 years after purchasing the policy.
This way, you will actually have a decent sum of money accumulated from your paid premiums to support the
cause and still leave you with enough for your death benefit.
While some other types of insurance may offer some similar benefits, the most common types of insurance to
use to help support your retirement is whole and universal life insurance. Whole life insurance is the most
beneficial in this case, because there is a cash value that accumulates within your account, and interest
helps it grow to maximize your benefits. This value is typically tax-free so you will not lose money on this.
Also, your policy will most likely come with a fixed premiums rate so you will not be forced to pay more in
premiums over time.
If you have a universal life insurance policy, you can also have a cash value associated with your policy
that can grow over time. The main different with a universal life policy is that the premiums are not fixed.
This means that policy holders can choose to pay less if needed, and fund their premiums with the cash value
from their coverage if needed. This can lower their death benefits. But policy holders also have the option
of paying more to raise their death benefit. The flexibility can be helpful if used correctly.
If you pay higher rates for your insurance, and have a generous death benefit, using your life insurance
coverage to assist funding needs in your retirement can be a great way to make the most of your money. By
spending it wisely, you will not waste money, and you can still have enough saved in your account to fund a
sufficient death benefit.
While it is not advised to purchase a policy driven with the intent of just funding your retirement, it
can be a great way to make the most of your policy and reap in all of the benefits. If this is something you
would like to consider, check the terms of your policy to see if you can borrow from your cash value, and
talk to your life insurance agent to see how it could fit your needs.
You’ve worked hard your whole life waiting for retirement, so why not try and give yourself a hand in
making that happen more smoothly!