“Life insurance as a retirement strategy” (LIRS) is an invaluable strategy for financial professionals to retain clients by helping them maximize their cash values for retirement. Permanent life insurance is legally allowed certain tax advantages, such as tax-free death benefits, tax-deferred cash value growth, and ttax-free access to policy cash values via withdrawal or loans; making LIRS highly beneficial for clients’ retirement savings and income when combined with a permanent policy. Here are some important guidelines for retirement strategies in life insurance:
Suitable Products for LIRS
LIRS is suitable only for certain permanent life insurance policies which can build cash value over time, and may even guarantee death benefits depending on what the overall planning goals are. These can include products such as universal life, variable universal life, whole life, and indexed universal life. Every retirement plan is unique, so it is important that you work closely with an advisor to find the product that works best for YOUR plan.
Features and Benefits
Perhaps the most important feature of LIRS is the choice and design of product. These products must be suitable for clients on an individual basis and be able to create long-term cash value. Important questions to ask are: What are the costs? Are the costs ongoing or for a specified period of time? Do you need strong guarantees? How large is the growth potential of the product? How flexible are the costs and benefits? Make sure the policy you choose is the right fit for you!
Who it’s For
LIRS is suitable for a wide variety of individuals and situations. Of course, those needing a death benefit for other parts of their planning will be most suitable for this strategy. However, the additional protection and benefits that life insurance can offer make this strategy extremely attractive for most individuals. The life insurance industry has seen an incredible evolution over the past couple decades, and products now offer protection against market loss, the devastating financial impact that serious illness or injuries can cause, as well as the ability to provide financial benefits at all stages of life. As if that wasn’t enough, the flexibility and accessibility of LIRS make this one of the best kept secrets in the financial world today.
LIRS strategies and the insurance carriers which employ them, such as Pacific Life, Zurich, Minnesota Life, Life of the Southwest and many others, have enjoyed great success. However, performance still depends primarily on professional product design. Each carrier has their unique products and niches, but they all share strong financials and balance sheets. These carriers are top rated, and have helped improve the lives of thousands.
LIRS strategies can provide a strong foundation for any retirement plan, or it can make a powerful supplemental tool to plans that are already in place. A client with a tax-advantaged retirement plan has few viable alternatives to LIRS because financial instruments like bank savings accounts, bonds, mutual funds, and equity brokerage accounts don’t have death benefits and may not offer the tax-deferred growth of cash value which life insurance provides. IRAs and tax-advantaged retirement plans also have other restrictions which don’t apply to LIRS, including contribution limits, income limits, early withdrawal penalties, and the inability to access funds prior to certain dates.
Camas Advisors Are Experts of Retirement Strategies Using Life Insurance
Permanent life insurance products vary greatly, come in many forms, and there are many different ways to design and develop each product. LIRS is a powerful strategy, however it must be carefully designed to avoid potentially devastating consequences. Having done this many times before, an experienced Camas Wealth Advisor can help you plan for your retirement, protect and monitor your loans and withdrawals from your policy cash values, and sort all your options to choose the coverage that’s right for you and your retirement planning.