Generate Retirement Income with Your Life Insurance Policy

If you have a life insurance policy, then you probably think of it as something that will benefit your friends and family later, after you have passed on. What you might not be aware of, however, is that your policy can actually benefit you while you’re still alive. You can, in many cases, use it generate retirement income or to supplement a less-than-ideal retirement savings account.   

Whole Life Insurance

If you have a whole life insurance policy, you already know that these policies definitely aren’t cheap. However, they do tend to accumulate a lot of cash value, which is good if you find yourself in need of extra funds during retirement. In fact, you can withdraw funds that the policy has earned or borrow against them if needed. Plus, if you set it up correctly in the first place, something that an investment adviser can assist you with, you can actually earn tax-free interest and/or dividends on your policy.

If you are thinking about taking out whole life insurance or if you want to use your policy to generate retirement funds, talk to your insurance provider and your financial adviser to get the ball rolling.

Universal Life Insurance

Another type of life insurance policy that can provide you with retirement income is a universal life insurance policy. With these policies, you can also earn cash value based on the interrest your policy generates. You can also raise and/or lower your death benefit and use the accrued interest on that.

Keep in mind, too, that with universal policies, there is an investment component as well, so you’ll be earning money, which can be used for retirement or really anything, if you know how to make the most of your policy. Again, having help from a financial adviser can really make all the difference between making your policy as effective as possible at earning you money.

No matter what type of policy you have, there’s a good chance that it can serve as an additional source of income for retirement. You just have to know how to work it and have the right help on your side!

Can You Pay for Retirement with Life Insurance?

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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