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Life Insurance Retirement Plan (LIRP)

Setting yourself up well for retirement starts early on, so thinking ahead is important. While life insurance is primarily designed to help you recover financially if you lose a loved one, the cash value portion of a whole life insurance policy can be used to help save retirement income.1 Aflac offers whole life insurance for individuals 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.

3.5 Min Read

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Key Takeaways

  • A life insurance retirement plan (LIRP) is a permanent life insurance policy that builds cash value over time and can serve as a supplemental retirement savings vehicle alongside traditional options like a 401(k) or IRA.
  • Aflac offers whole life insurance for individuals with cash value that can help you reach your retirement goals.

What is a life insurance retirement plan (LIRP)?

A life insurance plan, or LIRP, is a permanent life insurance policy with a cash value portion that accumulates savings over time.1 Permanent life insurance lasts a lifetime and also has a standard death benefit that can help loved ones cover expenses such as funeral costs, outstanding debts, and estate taxes.2 Keep in mind that a LIRP is not meant to replace a standard retirement plan, like an IRA or 401(k).1 When someone is considering a life insurance retirement plan or LIRP, they are usually referencing a permanent life insurance plan.

How LIRPs work

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.1 There are a few different ways this cash value can allow you to use life insurance for retirement benefits:1

  • Overfund cash value: If you choose to contribute a higher amount to your LIRP’s cash value, it can grow at a faster pace and give you a stronger foundation to work with later.
  • Borrow against cash value: You can take out a loan against the value reflected in your cash value savings account of your life insurance retirement plan. This may be especially helpful if you’re trying to make a large purchase later in life.
  • Withdraw cash value: In some emergency cases, you may be able to withdraw directly from the cash value savings account. However, this is not always possible, so we recommend taking a closer look at the life insurance retirement plans you are considering.
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Why should I get a life insurance retirement plan (LIRP)?

There are a handful of situations where a life insurance retirement plan can be especially beneficial:

  • Maxed out retirement contributions: 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.1
  • Family financial protection: 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.
  • Supplemental retirement savings: 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 2025 you can contribute up to $23,500 to an employee-sponsored 401(k) and $7,000 to an IRA per year.3

Get a quote for Aflac whole life insurance

Aflac offers whole life insurance for individuals that can help you reach your retirement goals. Our life insurance policies have comprehensive coverage that is designed with your needs in mind. Chat with an agent about our coverage options and get a quote today.

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