How to Use Life Insurance for Retirement

Retirement is a time to enjoy the golden years of your life, not stress over financial stability. If you plan on living life to the fullest, it’s best to start planning early and considering how you can incorporate life insurance into the framework. At Arlington Greene Agency, we care about preparing you every step of the way! So let’s talk about how to use life insurance for retirement!

There are many different ways to use life insurance for retirement preparations. Policies that come with cash-value components allow for the cash value account to grow over time–which can be used as a source of income in retirement years. Life insurance retirement plans (LIRPs) are paid via premiums from policyholders to insurance companies where a portion of the premium is placed into a cash value account that can grow over time! This cash-value account can then be drawn from once you retire.

Life Insurance for Retirement

What Life Insurance Should I Use For Retirement?

Normally, the best way to weave life insurance into your retirement is to purchase a simple term life insurance policy with an adequate death benefit while investing in other disposable income for tax advantages.

Term life insurance is the best option for anyone who has children or other dependents who rely on their income for support. It’s the least expensive type of life insurance that considers out of pocket costs and balances the amount of coverage you get with the money you spend. Term guarantees payment with a determined death benefit during a specific term like (10, 20 or 30 years) and has no cash value component. Given the costs, it can be a useful investment for retirement savings. Term life can provide basic protection for a family if the main source of income passes and also frees up more disposable income.

If you have an increasing projected financial loss, you’ll want to lean towards permanent life insurance. It will provide for your beneficiaries in case of sudden death ands would eliminate the increasing income you plan to provide even into retirement. Permanent life insurance, whether whole or universal life, offsets the cost of estate taxes before an inheritance gets passed on to your loved ones. To ensure your death benefit will be paid out when you pass, this is the best choice. Term policies may be more affordable, but you are only covered for a specific number of years.

Life Insurance for Retirement

Invest The Rest!

After selecting your life insurance policy, where should you invest the remainder of your money? Well, depending on your situation, you might want to devote some of that money into an emergency fund or possible disability coverage–but let’s look at other options for now. 

If an easygoing retirement is your goal, you want something with tax advantages. A traditional IRA is a good choice assuming you meet the requirements. You could also max out on your 401k or a similar plan at work if that’s available. If you don’t qualify for those kinds of accounts, you can always invest outside of a retirement account without enjoying all the tax benefits. Finally, lookout for an index fund. This is a low cost option easily found at most brokerage firms and mutual fund companies. 

Curious about your life insurance costs? Click here to try our free life insurance calculator!

Life Insurance for Retirement

Other Considerations for Retirement Planning

  • Begin Saving…Early! According to the consumer financial protection bureau, “24% of Americans have no savings set aside for emergencies”. Creating an emergency fund is the best way to put your savings to good use. It covers any big, unexpected bills that come along and keep regular contributions on track. It’s never too late to start saving for retirement. Start saving early! It gives your money more time to grow, but even a small investment will pay off in the long run!
  • Create Retirement Goals. How much money you need to save for retirement can depend on a number of factors like lifestyle, current income, everyday expenses and retirement age. Once you start planning for a goal, it’s easy to know exactly what you’re looking for. 
  •  Don’t Forget a Savings Account. There are many advantages and disadvantages available with retirement savings accounts. A few popular options include 401 (k) plans and Individual retirement accounts (IRAs). Remember to choose the one that fits your retirement goals the best! 
  • Long-Term Disability. It’s important to consider disability insurance in case a family member becomes unable to work. Most people can get disability coverage as an employee benefit, but sometimes this isnt enough. Look for a guaranteed renewable policy. Your premiums will not increase, and your policy will stay active as long as the premiums are paid.
  • Invest Wisely. Once you’ve found a retirement savings account, it’s time to invest your money…wisely! Whether it’s stocks, bonds or mutual funds, choose the right investments that are appropriate for your time frame and risk tolerance.
  • Checks & Balances. You should rebalance your portfolio regularly. Risk tolerance changes as you get older and you need to make sure it continues to meet your retirement goals, needs and possible emergency situations.  

Need Help with Retirement Planning? Call Arlington Greene Agency Today!

Planning for retirement can seem even more daunting when you have to consider life insurance. That’s why it’s important to visit a professional. They have the insight to help you assess your need, choose the right type of life insurance, and develop an investment strategy that you can count on. At Arlington Greene Agency, our agents have helped thousands of clients find the right policy to fit their needs. 

At Arlington Greene Agency, we have experts in the life insurance field who are ready to help you avoid these hurdles. We offer all the same policies that you would find going directly through a specific insurance company, but we can help you find the right coverage at the best rates by comparing them side-by-side. As a small, family-owned business, our goal is to provide the best service to all our clients. No matter which policy you decide to go with, our team can help curate a plan just for you—guiding your family into securing your financial future!

Scroll to Top