Recently I read a comment by an executive at ING stating that most people have their retirement “chosen” for them. Rather than having the flexibility to plan and control one’s life to the fullest, many people are being shown the exit by arbitrary age limits (66 or later for Social Security, for example), forced retirement (65 for commercial airline pilots), required minimum distributions from retirement accounts, or various forms of age discrimination.
What if you don’t want to stop at some age prescribed by some organization, the government, or society? A good number of people are missing a significant opportunity to provide for their own retirement, on their own terms by ignoring the tax favored benefits of cash value life insurance. While the primary reason for having life insurance is to provide a death benefit to survivors, permanent life insurance policies offer a significant array of what can only be described as “living” benefits! That’s right — benefits that a life insurance policy, crafted correctly, can provide to a person while they are still alive.
This series will look at several ways that the cash value of a permanent life policy can be used. First of all, let’s restate some key elements of life insurance::
Policies that accumulate cash value, such as universal life, can often be overfunded beyond the premium that is required to provide the basic policy features. Even relatively minor amounts of overfunding can provide significant returns over time.
The cash value of such a policy can be used to provide increased flexibility in planning for retirement by::
In the next chapter, I’ll address the use of life insurance to support the launching of or insuring the sustainability of a business. Future chapters will deal with paying for a child’s or grandchild’s education, supporting other family members, and helping to cover the cost of illness or extended care.