How Life Insurance Could Help Your Retirement
Almost 40% of Americans don’t have life insurance. The most common reason being that life insurance is considered to be a costly expense, even though most insurance companies offer low cost coverage. For example, a 30-year-old woman in good health can get $150,000 of coverage for between $12 and $16 per month.
On the other hand, retirement is a cause for quite some concern among Americans. According to current statistics, 1 in 3 Americans have no retirement savings at all. What many of them may not be aware of, though, is that if handled correctly, their life insurance policies could play a role in making retirement a little more secure.
A successful retirement is all about making sure you have enough savings to pay your bills and still be able to enjoy a comfortable lifestyle. Few people have pensions any more. Social Security only goes so far. But if structured the right way, a life insurance policy could be the perfect life preserver in retirement.
Using supplemental life insurance for retirement planning comes with a number of advantages.
Over the years, a person pays premiums into a permanent life insurance policy with the intent to provide a death benefit as well as cash-value accumulation for as long as the policy remains in force.
When you need money for retirement, you can withdraw funds without paying income taxes, and without early withdrawal penalties, generally up to the amount of the total premiums you paid into the policy.
If you go over that amount and still need money, you can take loans against the cash-surrender value, although that means when you die any outstanding loan and interest amount would reduce the amount your policy beneficiary would receive.
People usually view life insurance premiums as just one more bill. Instead of thinking of it as a bill, though, it could be viewed as a contribution to your retirement.
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