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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 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, in 2024 you can contribute up to $23,000 to an employee-sponsored 401(k), up from $22,500 in 2023 and $7,000 to an IRA per year if you are over 50 years old, up from $6,500 in 2023. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.8
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.
1 Policygenius - Life insurance retirement plans (LIRP). Updated August 24, 2023. Accessed January 30, 2024. https://www.policygenius.com/life-insurance/life-insurance-retirement-plans/.
2 Investopedia. Permanent Life Insurance Definition. Updated June 21, 2023. Accessed January 30, 2024. https://www.investopedia.com/terms/p/permanentlife.asp.
3 IRS.gov. 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000. Updated November 1, 2023. Accessed January 30, 2024. https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York. 68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Final Expense insurance coverage is underwritten by Tier One Insurance Company. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908). In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
Aflac WWHQ | Tier One Insurance | 1932 Wynnton Road | Columbus, GA 31999
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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