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The many uses of life insurance - Part 6 of 6 – Retirement Supplement

Updated: Jan 13

Alan J. Mendlowitz, RICP, CRES



As you plan for retirement, it's important to consider all of the different options available for supplementing your income. One potential source of income that you may not have considered is a certain type of life insurance policy. While life insurance is primarily known for its death benefit, some policies can also be structured to provide a source of tax-deferred and even tax-free income during retirement.


Whole life insurance and universal life insurance are two types of policies that can be used to supplement retirement income. These policies can build up cash value over time, which can be accessed through loans or withdrawals during retirement. If structured correctly, these policies can provide a reliable and tax-efficient source of retirement income.


One of the benefits of using life insurance to supplement retirement income is the tax-deferred growth of the cash value. Unlike some other investments, the cash value of a life insurance policy grows tax-free until it is withdrawn. This means that you can potentially accumulate a larger amount of savings over time than you would with a taxable investment account. Usually, the income you take is tax free, increasing the amounts available to you and not creating a concern over higher taxes!


Another benefit of using life insurance for retirement income is the flexibility it offers. With some policies, you can choose to receive a guaranteed minimum withdrawal amount for a certain number of years, or you can opt for a variable withdrawal amount based on the cash value of the policy. This flexibility can be especially useful if your retirement income needs fluctuate over time.


It's important to note that not all life insurance policies are created equal when it comes to retirement income. In order to try to maximize the cash value and income potential of a policy, it must be structured correctly. If you're interested in learning more about using life insurance to supplement your retirement income, it is important to speak with a knowledgeable professional who can guide you through the process and help you navigate the complexities of these policies. I specialize in helping clients make informed decisions about this and other financial situations. To book a consultation, click on “Schedule an Appointment” above! I look forward to helping you achieve your retirement goals.





Here are some sources that discuss how certain types of life insurance can be used to supplement retirement income:

Investopedia: How Life Insurance Can Help With Retirement Income

(https://www.investopedia.com/articles/personal-finance/102115/how-life-insurance-can-help-retirement-income.asp)

Forbes: How To Use Life Insurance To Help Supplement Retirement Income

(https://www.forbes.com/sites/timmaurer/2018/01/16/how-to-use-life-insurance-to-help-supplement-retirement-income/?sh=13fe52c242d5)

The Balance: How Life Insurance Can Help You In Retirement

(https://www.thebalance.com/how-life-insurance-can-help-you-in-retirement-4177714)

Kiplinger: Retirement Income from Life Insurance

(https://www.kiplinger.com/article/retirement/t003-c032-s014-retirement-income-from-life-insurance.html)

Please note that while these sources provide useful information, it is always best to speak to a financial professional who can provide personalized advice tailored to your individual circumstances. To schedule a meeting with me, you can visit www.financialadvisoryservices.net/calendar.

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