More to Life Than You Might Think
Life insurance is something that helps your loved ones after you've passed away, right? It's not something that can benefit you while you're still living, is it?
Actually, that's a common misconception.
Many people don't realize that life insurance could represent a unique (and potentially valuable) option in your overall financial strategy, in some cases offering much more than just a death benefit to your beneficiaries.
When properly structured, a life insurance policy can provide several income benefits while you're still living, including:
Tax-deferred cash value growth potential
Supplemental retirement income through tax-free policy loans or withdrawals*
No required minimum distributions (RMDs)
No 10% penalty tax for accessing policy cash values before age 59½
Financial flexibility
* Policy loans and withdrawals are not usually subject to income tax unless the policy is classified as a modified endowment contract (MEC) under IRC Section 7702A. Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change; consult a tax professional about your personal situation.
The 5 Pillars
When heading toward retirement, these five pillars will likely be top of mind. Did you know life insurance can help provide solutions to all these concerns? Yes, life insurance. Leveraging the asset of life insurance may help you more fully enjoy retirement by seeking to improve your overall financial position.
Hover over the arrows on the pillars below to learn more.
Legacy: Do you have qualified money or annuities you no longer need for retirement income? Do you plan to leave those assets to your beneficiaries? We can show you ways to leverage life insurance to potentially increase the amount you pass on to your beneficiaries.
Income Planning: Life insurance can be an asset in a “class of its own.” With a tax-free death benefit, tax-deferred growth potential, tax-free distributions and no IRS income or contribution limits, life insurance can provide a level of diversification in a well-rounded retirement strategy. With permanent life insurance, such as indexed universal life (IUL), we can help you create a tax-efficient, diversified retirement strategy with the potential to accumulate cash value that can be accessed via policy loans and withdrawals for supplemental retirement income in addition to providing a death benefit.
Chronic Illness and Long-Term Care (LTC) Benefits: With fewer carriers offering traditional long-term care (LTC) insurance combined with the trend of increasing premiums, you may be looking for an alternative to help pay for the costs associated with long-term care. Several life insurance options can help provide you with a level of protection to help cover this need.
Policy Review: Reviews are an opportunity to assess your existing coverage to ensure it aligns with your current life circumstances and comprehensive financial goals, legacy wishes and retirement income needs, and to identify any potential gaps.
Tax Benefits: We all face the dilemma of planning to make sure our money outlasts our lifespan. Taxes can be a question mark in this planning process. Knowing when your income will be taxed is only half the battle. You also need to know what the tax rate for your future income will be. Permanent life insurance, such as indexed universal life (IUL), can be part of a tax-efficient, diversified retirement strategy with the potential to accumulate cash value that can be accessed for supplemental retirement income in addition to providing a death benefit.
Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.
This information is not designed to be a comprehensive discussion of life insurance. Product and feature availability may vary by state. Life insurance agents do not give legal or tax advice. Our firm provides insurance services.
LTC benefits are optional and may involve additional annual charges. LTC riders are NOT a replacement for long-term care insurance. Life insurance policies are subject to medical/financial underwriting, contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender charges. If properly structured, proceeds from life insurance are generally income tax free. All insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. While permanent life insurance can provide many possible benefits, please note that exercising one or more of them will likely mean reducing or eliminating other benefits. 5/22-2188523
When Might Change Be Good?
Americans face several financial risks during their lifetime. Some of these risks may be reduced over time and can often be addressed through the use of term life insurance. However, some risks actually increase as we age and their solutions become more daunting. One potential solution may be permanent life insurance, which not only provides a tax-free death benefit to your beneficiaries but also includes a cash value component that could be used to address key risks in retirement.
Types of Life Insurance
Permanent Life Insurance
Permanent life insurance can last for the policyholder's lifetime, so long as the premium payments are made. This solution can include several types of insurance, including whole life, universal life and indexed universal life insurance.
In addition to the death benefit, these policies also include a "cash value" component that can be tapped into during your lifetime.
Term Life Insurance
Term life insurance is designed to provide a death benefit and is only held for a specific period, such as 10, 15 or 20 years, so long as you pay your premiums.
- Policies are based on your age, gender and health and life expectancy.
- Some policies can be renewed after expiration with adjusted premiums.
- Policies guarantee a death benefit payment if you pass away during the specified period.
Term life insurance policies don't include a "cash value" component, the protection extends only during the life of the policy and they are generally less expensive than permanent life insurance.
Insurance products are offered through the insurance business Texas Financial and Retirement. Texas Financial and Retirement is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. AEWM does not offer insurance products. The insurance products offered by Texas Financial and Retirement are not subject to Investment Advisor requirements.
References to protection benefits, safety, security or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance carrier.
What's Right for You?
Every person's situation is different. We can help you review your needs and goals and determine which type of life insurance might best suit your circumstances.
If you have questions about life insurance and how it might fit into your overall financial strategy, we'd love to discuss it with you.
Click the button below or give us a call at 903.534.5477 to schedule your appointment today.
Take a Step Toward Financial Independence
It's never too early or too late to take control of your financial future so you can enjoy life on your terms. Get started by scheduling a no-obligation meeting with Texas Financial & Retirement or registering for an upcoming event.
