Everyone knows that saving for retirement is important.
Unfortunately, though, with all the expenses and surprises in life, that isn’t
always easy. As such, many people find that, as retirement looms closer, they
haven’t saved nearly as much as they hoped.
If you find yourself in that position, however, you may be
able to use some of your life insurance cash to help supplement your retirement
savings. This isn’t possible with all policies, but a great many of them can be
used to add to your retirement fund.
You’re most likely to be able to benefit from your policy if
you have a whole life policy. This type of policy would only expire if you
chose to cancel it, and, while it does have higher premiums than other types of
policies, you typically do earn cash value. If needed, you can borrow against
the policy or make direct withdrawals from it during retirement.
In fact, in most cases, you can do so, up to the amount of
cash value in the policy, without having to pay exorbitant taxes, or, in some
instances, any taxes.
You may also be able to pay for some of your retirement
expenses through a Universal life insurance policy. Like whole life policies,
these policies are permanent and do earn cash value. However, your premiums can
be adjusted as necessary depending on your financial circumstances, as can your
death benefit. This makes Universal insurance a good option for those on a
tighter budget.
Universal insurance also has the benefit of acting as an
investment. Some of your premium is used toward paying for the policy, of
course, but you can also invest some of it as desired. Then, your returns will
reflect how the investment performed, allowing you to borrow against the cash
value tax-free for as much as you’ve paid in. However, you’ll have to invest smart
to avoid losing money.
As you can see, you do have some options for borrowing
against your life insurance during retirement. Obviously, the best case
scenario would be that you had saved enough to not have to do this, but, if you
do find yourself in a jam come retirement time, know that these options are
available to you and definitely worth considering.
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