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Retirement Planning And Life Insurance

Retirement Planning And Life Insurance

There may be many good personal reasons to have life insurance for you. However, that must include retirement planning. This is because the different retirement plans like 401 (k), mutual funds and IRAs as well as a host of other investments must be protected. After you pass away, your spouse must be protected from the loss of retirement savings which could be achieved from having a life insurance.

A report brought out by the Federal Interagency Forum on Aging-Related Statistics, 2000 said that the population of older people would double in the next 30 years and would become 70 million by 2030. Over the next 50 years, it is expected that the population of 85 years and older would grow faster than any other age group. This kind of statistics make you wonder whether what you are planning is enough to live a comfortable life through your retirement.

Objectives of life Insurance

The Life and Health Insurance Foundation for Education, in its website offers three objectives for retirement planning. These are:

  • Stop your retirement plans from dying when you are not there
  • Preserve your estate assets for the survivors
  • Supplement your retirement income

It is important to keep these basic objectives in mind while planning for your retirement because if all your life you have worked to save for your retirement life, you will definitely like to protect your savings. If you pass away before you retire, your survivors would be leading their life without your income and retirement savings.

Cashing life insurance policy

After you retire, you can surrender your policy and make use of the cash value you receive to supplement your retirement savings. In addition to this, you may plan to sell your policy to a third party.

Life insurance to supplement your income

An effective way to have tax-free cash during your retirement is to supplement your life insurance. The general trend of living longer lives and lowering of social security make less availability of retirement funds in your traditional investments. Herein lays the importance of supplementing your income with life insurance that would be an excellent choice. This is because your life insurance policy generates tax-deferred cash value which can be borrowed against.

Life insurance to meet estate taxes

If the total estate value is over $2 million, your life insurance policy would come to great help in generating additional money to your beneficiaries to meet hefty estate taxes. And if the estate value is less, the payout can be used to provide additional financial assistance to your family.


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