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There are many different paths one can take to prepare for retirement. While life insurance plans are primarily designed to help you recover financially if you lose a loved one, they can also be used to help save retirement income.1
Specifically, the cash value portion of a whole life insurance plan may be able to help complement your existing retirement savings. Luckily, Aflac offers whole life insurance with cash value to help you meet your retirement savings goals. Let’s dive deeper into what a life insurance retirement plan (LIRP) is, how LIRPs work, and who should get this type of retirement plan.
LIRP means life insurance retirement plan and is not meant to replace a standard retirement plan, like an IRA or 401(k).2 When someone is considering a life insurance retirement plan or LIRP, they are usually referencing a permanent life insurance plan. The two life insurance terms can be used interchangeably.3
LIRPs are permanent policies because they have a cash value portion that accumulates savings over time.4 Permanent life insurance plans also have a standard death benefit paid to a beneficiary when the policyholder passes, and the plans never expire.5 This means that the life insurance retirement plan lasts the entire life of the policyholder.
Essentially, when you pay premiums for a life insurance retirement plan, part of that payment is put into a savings account known as the cash value. This savings account can grow over time, tax-deferred, at a pre-determined interest rate.6 There are a few different ways this cash value can allow you to use life insurance for retirement benefits:
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
There are a handful of situations where a life insurance retirement plan can be especially beneficial. If you are already contributing the maximum amount to your 401(k) or IRA, you may be ready to start using a permanent life insurance plan for a retirement strategy.7
Additionally, if you have anyone in your family who depends on you financially, a LIRP can help you prepare for retirement and protect your loved ones if a tragedy were to strike.
Lastly, if you have significant financial goals for your retirement, a LIRP can help you save additional money outside the IRS contribution caps. For example, you can only contribute $19,500 to an employee-sponsored 401(k) and $7,000 to an IRA per year if you are over 50 years old.8
Luckily, Aflac offers permanent whole life insurance as a life insurance retirement plan to help you protect your family and plan for retirement wisely. With this LIRP, you don’t need to choose a term length, the cash value will grow tax-deferred as long as payments are met, and your beneficiary is guaranteed a death benefit.
Your whole life premium payments are determined by your age, medical history, and coverage goals. Chatting with an agent today can help you outline your current and future goals.
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1-4, 6-8 Business Insider - What are Life Insurance Retirement Plans. Updated Aug 20, 2021. Accessed Feb 14, 2022. https://www.businessinsider.com/personal-finance/what-are-life-insurance-retirement-plans.
5 Investopedia. Permanent Life Insurance Definition. Updated March 28, 2021. Accessed Feb 14, 2022. https://www.investopedia.com/terms/p/permanentlife.asp.
In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400 and Riders: ICC1368050, ICC1368051, ICC1368052, ICC1368053, ICC1368054, ICC1368055. This is a brief product overview only. Coverage may not be available in all states, including New York. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent.
Content within this article is for informational purposes and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process. For complete details, including availability and costs of Aflac supplemental insurance, please contact your local Aflac agent.
For Aflac insurance, coverage is underwritten by Aflac | WWHQ | 1932 Wynnton Road | Columbus, GA 31999 | In New York, coverage is underwritten by Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211.