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Life Insurance Retirement Plan (LIRP)

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.

What Is a Life Insurance Retirement Plan (LIRP)?

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.

How LIRPS Work

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:

  • 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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Who Should Get a Life Insurance Retirement Plan (LIRP)?

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

Get a Quote for Aflac Whole Life Insurance

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.

Still have questions?

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