People prepare for retirement in many ways, and the agents at the Michael Taylor Agency in Columbia, SC, explain how retirement insurance policies work. While most people think of life insurance plans as insurance created to help your loved ones financially when you die, there is also what is referred to as a retirement life insurance plan. This type of plan can help you save your retirement income while using the benefits of your whole life insurance policy.
This means that the cash value portion of your whole life insurance policy plan can help you when combined with your existing retirement savings. Let’s look a little deeper at what retirement insurance policies look like.
What Is a Life Insurance Retirement Plan (LIRP)?
A life insurance retirement plan is not designed to replace a standard retirement plan, such as your 401K or IRA plan. Usually, when someone is thinking about acquiring a life insurance retirement plan, they think more about a permanent life insurance plan. This means the two terms can be used interchangeably.
A life insurance retirement plan is a type of permanent policy with a cash value portion that accumulates like a savings account throughout the policy’s life. It will have a benefit that is paid to a beneficiary when the policyholder dies, and the plan will never expire. This means that a life insurance retirement plan will last throughout the life of the person who holds the policy.
How It Works
You pay your premiums for a life insurance retirement plan, and a portion of each of your payments is put into a savings account, which is then referred to as the policy’s cash value. This type of savings account can grow over time and is tax-deferred at a predetermined interest rate.
You can use your retirement insurance plan as an overfunded cash value, which means you can contribute more money to your policy’s cash value throughout the years before you need it. This will give you a stronger foundation to have in place when you do retire. You could also borrow against the policy’s cash value, which is basically like taking out a loan. This can help you if you make larger purchases later in your life. A withdrawal cash value is available for some emergencies, which means you can withdraw directly from the cash value savings account.
To start your retirement insurance policy, call upon the professionals at the Michael Taylor Agency in Columbia, SC today!