You are already aware that life insurance can greatly benefit your family at the time of your death. What you might not know is that your life insurance can also help you in retirement. Here are three ways that you can benefit from your life insurance policy during retirement.
Estate Planning
You may not realize that your life insurance can help you with your estate planning. This help comes predominantly in the form of wealth protection. If you have accrued significant wealth that will require taxation at the time of your death, you can mitigate those costs with an irrevocable life insurance trust (ILIT). Money from your ILIT will pay down estate taxes and can also cover other expenses associated with the estate management. This prevents your heirs from being forced to liquidate other assets to cover these costs, greatly reducing the hassle and strain placed on them.
Borrow Against Your Cash Value
Some life insurance policies may give you cash now to pay for senior living expenses or other family expenses. For example, if you have a permanent life insurance policy, you can easily borrow money from the cash value. The cash value is the amount you would receive at the time of your death or termination of the policy. This is possible because, with each payment toward your policy, some of those funds were applied to the cash value. Borrowing from your permanent life insurance policy offers low interest rates, and you can pay it back whenever you choose. You must, however, make sure that the amount of the loan plus interest never exceeds the cash value. Also, keep in mind that if you don’t repay the loan, your beneficiaries will lose out on that money.
Use Your Cash Value as a Source of Retirement Income
In addition to taking out a loan from your cash value, you can use it to make monthly withdrawals to subsidize your retirement income. Several types of retirement policies allow you to do this, including universal, whole, and variable life insurance plans. Basically, your cash value acts as a savings account that you can tap into as needed. Just remember, when you use your cash value as supplemental income, it is likely that your heirs will not receive any life insurance funds at the time of your death.
Unfortunately, life doesn’t always go as planned. Luckily, there are other ways to get by when plans A, B, and C don’t pan out. With the right policies, your life insurance policy could offer much needed financial help during retirement. Contact Harris Insurance for your life insurance options today.
Read this next: Simple Measures That Reduce Liability at Your Business
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
