Life Insurance Policy for Retirement
You probably already understand that one of the primary purposes of life insurance is to provide your beneficiaries with financial assistance when you pass away, however, you may not know that it can offer other benefits as well. If you are thinking of the future and planning for retirement in Willmar, Minnesota, and want to know how a life insurance policy can be used to help increase your retirement fund, the experts at MG Insurance Inc. can help. This blog will describe how you can use life insurance for your retirement.
Accumulating a Source of Funds for Retirement
Some kinds of life insurance can help provide additional retirement income, however, it is important to note that not every type of retirement policies can. If a policyholder invests in a type of permanent life insurance such as whole life, universal, or variable policies, it can help them accumulate money while premium payments are made over a period of time. A policyholder will be able to borrow against the cash value of the policy for anything that they may need, for instance, making a down payment of a home or some other type of expensive purchase. Borrowing from these types of policies tend to offer better interest rates than taking out a personal loan. It is important to remember that using your life insurance policy funds for other reasons decreases the overall value of the death benefit, but if it is used carefully, it can be a productive source of income during your retirement.
Having Financial Protection During Market Shifts
Retirement account values and equity investments do fluctuate, causing financial issues if you rely on those accounts as an income stream during retirement. If you have to withdraw money from an equity-based retirement plan when a downturn in the market occurs, the principal amount that future returns will be based on will decrease. In the event of a volatile economic market, having a sizable cash value amount from a whole life insurance policy can help to support you financially.
Tax Benefits of Using Your Life Insurance Policy for Retirement
Another major benefit of taking money from the cash value of your life insurance policy is that it is not subject to taxes up to the amount that is paid into the policy through out of pocket premiums. Using the cash value of the policy again will reduce the death benefit and policy value, and it can increase the likelihood that the policy lapses. If the policy does happen to lapse and there is an outstanding loan balance, that amount will be taxable.
Life Insurance and Retirement Assistance
In some cases, certain life insurance policies can be a profitable option for supplementing your retirement. If you are interested in exploring your financial options with a life insurance policy in Willmar, Minnesota, contact MG Insurance Inc. today for a consultation.