Most people think of Life Insurance for the Death Benefit protection. What you really need to learn is how to use life insurance while alive! A Life Insurance Retirement Plan is one of the best ways to take advantage of Life Insurance while you are still alive.
Most people might have a vague idea that permanent life insurance has cash value, but they don’t know what it is or what you can do with it. Most people don’t know about using life insurance for retirement income. It’s important to understand that a Maximum Over-funded Life Insurance Policy can powerfully increase the amount of retirement income you can get from your precious savings. That means that it doesn’t take as much savings to get the same amount of income.
Avoid Market Volatility
You should realize that Life Insurance company reserves are held in conservative debt investments. This means that with a Life Insurance Retirement Plan your retirement savings is not exposed to the Wall Street Casino. Even in the case of an Indexed Universal Life, the assets themselves are not invested in the markets. The insurance company is hedging with what would have been your dividend in an effort to capture a better return. What this means is that the worst case scenario each year is that your cash value has zero growth. This is far better than losing as much as 40% in the markets as we have seen recently.
All Life Insurance companies are required by state statutes to make loans to their policy owners secured by the cash value of the policy. Moreover, if the loan interest is not paid when due, the insurance company is required to loan you the money to pay themselves the interest… as long as you have enough cash value to secure the new loan. Does that sound too good to be true? Click the link and read the Florida Statute for yourself. All 50 States have similar language in their statutes.
This policy loan requirement is the magic that allows for tax-free income from life insurance. It’s important to understand that you are getting a loan from the insurance company. You also need to be aware that this loan is secured by your cash value. Because you are receiving a loan, it is not considered income for income tax purposes. And because the insurance company is loaning you the money to pay themselves the interest, there are no loan payments to make.
It may seem hard to understand, but please take the time to watch my videos and read my articles. You will find that because you are not actually taking any money out of your savings, 100% of the cash value is continuing to grow and earn interest crediting. This means you can get more retirement income than the typical 4%-Rule would dictate.
I dive a little deeper into Life Insurance Retirement Plans on this page.
Get 2 to 3X More Income From Your Life Insurance Retirement Plan!
It is important to know that a Life Insurance Retirement Plan can provide 2 to 3 times the income from the same amount of savings. That means its not about the total amount of retirement savings. Its getting more from less with more safety.
It’s not magic, you just need to understand that because you are not actually withdrawing money, 100% of the cash value continues to grow and earn dividends or interest-crediting. When I first noticed how much Income life insurance illustrations were projecting, I thought it had to be a mistake. For example, an Indexed Universal Life with $1 million in Cash Value would likely be able to produce about $80,000 per year in tax-free income (policy loans).
The “4%-Rule” would dictate that a person should only withdraw $40,000 per year from $1 million in retirement savings. But its even worse if your money is in a 401(k) or IRA. The key thing to know is that you have to pay income tax on distributions from either of these. That means that if your average tax rate is 25%, then you are only going to net $30,000 after taxes!
Learn more here.
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No Rendering of Advice: The financial content in this document is provided for your personal education. It is not intended for trading purposes, and cannot substitute for professional financial advice. Always seek the advice of a competent financial advisor with any questions you may have regarding a financial matter. Information in this document is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of advice (investment, tax, or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.
The sole purpose of life insurance is for the death benefit protection. Any other benefit is ancillary.