Setting yourself up well for retirement starts early on, so thinking ahead is important. There are many ways that one can start planning, including factoring in life insurance for retirement.
It’s important to note that life insurance is not a retirement plan. While life insurance is not meant to fully prepare you for your financial needs later in life, it can complement and strengthen your existing plan of action. Read on to learn more about how life insurance can help fund your retirement.
Aflac offers a few options that may be able to help you prepare for retirement. There are a variety of advantages if you choose to go with an Aflac® Life Solutions – Term and Whole Life plan. If planned correctly, these policies may be able to support your life insurance retirement plans.
Term life insurance lasts for a specific period of time, instead of providing coverage for the entire life of the policyholder. It tends to be a little less expensive than whole life insurance, which may be appealing if you are looking to save money upfront.1
If you choose to go with a term life insurance plan, you may have more income to put toward other retirement funds.2 This route allows you to save more money early in life compared to whole life insurance. That money can be put toward a variety of other retirement funds, like an IRA. We recommend chatting with a financial advisor if this sounds appealing to you.
This type of life insurance retirement planning can also be helpful if there is a partner involved. The death benefit could help provide for them financially later in life if a partner were to pass during the term.3
On the other hand, whole life insurance lasts the entire life of the policyholder and may utilize a cash value benefit. Cash value typically grows in a tax-deferred account at a steady rate. In some cases, you may be able to access the cash value early or take out a loan against it. Being able to take out a loan against this value may prove beneficial when retirement rolls around.4 You may be able to use that loan to help cover basic retirement costs.
This depends on the plan you choose and the state you reside in. We recommend you chat with an Aflac agent to see if this option is available for you.
Many of Aflac’s life insurance policies may be able to help you reach your retirement goals. They all use different methods, so you’ll need to decide which plan makes the most sense for your financial objectives and lifestyle. There are also a handful of life insurance tax benefits that can sweeten your retirement plans too.
For instance, the cash value portion of permanent life insurance plans is tax-deferred so this account grows a little faster than it would if taxes were being taken out. Also, some companies pay out tax-free dividends with any money left over after premiums, claims, and expenses are paid.5
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
Are you interested in factoring life insurance into your retirement plans? Term life insurance may be more useful if you are hoping to save more money early on so that you have more income to utilize as you get closer to retiring. On the other side of the coin, whole life insurance makes more sense if you are more interested in cash value and possibly taking out a loan.
To see if these options are available and if life insurance is good for your retirement plans, chat with an Aflac agent today.
Explore your life insurance options.
1 Investopedia. Strategies to Use Life Insurance for Retirement. Updated February 17, 2021. https://www.investopedia.com/articles/personal-finance/112614/strategies-use-life-insurance-retirement.asp. Accessed July 1, 2021.
2 Investopedia. Strategies to Use Life Insurance for Retirement. Updated February 17, 2021. https://www.investopedia.com/articles/personal-finance/112614/strategies-use-life-insurance-retirement.asp. Accessed June 29, 2021.
3 Investopedia. Strategies to Use Life Insurance for Retirement. Updated February 17, 2021. https://www.investopedia.com/articles/personal-finance/112614/strategies-use-life-insurance-retirement.asp. Accessed June 29, 2021.
4 Simple Dollar. Using the Cash Value of your Life Insurance Policy. Updated June 17, 2020. https://www.thesimpledollar.com/insurance/life/life-insurance-cash-value/. Accessed June 29, 2021.
5 Simple Dollar. Using the Cash Value of your Life Insurance Policy. Updated June 17, 2020. https://www.thesimpledollar.com/insurance/life/life-insurance-cash-value/. Accessed June 29, 2021.
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 persona will have to consider in their benefits decision making process.
In Arkansas, Idaho, Oklahoma and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400, ICC1368050, ICC1368051, ICC1368052, ICC1368053, ICC1368054, ICC1368055. ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400.
Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies/riders have limitations and exclusions that may affect benefits payable. For complete details, including availability and costs, please contact your local Aflac benefits advisor.
Coverage is underwritten by Aflac.
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In New York, coverage is underwritten by Aflac New York.
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