As people age, they may believe they have less of a need for life insurance. But we find that retirees generally keep their life insurance and some of them will even buy more. Here’s why.
A life insurance policy can serve as:
a buffer for market volatility;
a way to provide tax-diversification;
a tool for estate planning; and
one of the best vehicles to help maintain your spouse’s lifestyle on your death.
Buffer Market Volatility with Whole Life Insurance
Are you planning to withdraw retirement income from traditional qualified retirement plans such as 401(k) plans and IRAs but are concerned about the volatility of equity markets impacting the value of your nest egg?
Then whole life insurance may be an asset that you want to own. Whole life insurance policies have cash value that is guaranteed to increase in value every year and will not go down when your investment accounts do. You can use this asset for retirement expenses during investment downturns and allow your investment accounts to rebound in value.
The Non-traditional Solution to Tax Uncertainties
Permanent life insurance, when purchased in conjunction with other retirement investments, may provide an ideal way to help tax-diversify your retirement savings. How?
Withdrawals and loans from your policy values are generally income-tax free to you under the internal revenue code.*
Because withdrawals and loans can be taken on an income-tax-free basis, they do not subject your Social Security income to taxation, unlike income from other sources.
There is no 10 percent penalty tax on cash values distributed prior to age 591/2 (if the policy is not classified as a modified endowment contract).
You decide when, or if, to take distributions because there are no required minimum distribution rules.
Spending Down Assets While Death Benefit Ensures Money for Your Family
One of the best things about adding life insurance to a retirement plan is the freedom it provides. With a permanent life insurance policy as part of a retirement plan, you can worry less about depleting other retirement assets because the life insurance policy can provide the legacy you hope to leave to the next generation.
The contemporary life insurance market is way more extensive than a source of income for beneficiaries when catastrophe strikes. With a plethora of options, these plans offer you and your entire family peace of mind, and often give your money investment opportunity to allow you to enjoy the money invested during your lifetime.
Choosing the perfect life insurance plan depends as much on your financial needs as it does on your health class rating. We will assess all factors and guide you through every option until we find the perfect plan for you.
Cosmo Insurance Agency is knowledgeable in various options including but not limited to – term, ROP, permanent and whole - from over two dozen A rated carriers. We are familiar with the rate classifications that particular carriers use to determine the health class of enrollees – and there are significant differences between them. No matter what the results of your medical examination are, we will find the insurer that will provide you will the best rating class and thus the lowest premiums.
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