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Using Life Insurance For Retirement
As you near retirement, you may want to consider how you can use life insurance for retirement, to help maintain your lifestyle.
One of the main purposes of life insurance is to provide for your loved ones in the event of your death. If something were to happen to you, you would want to make sure your family has the income they need. However, life insurance has benefits beyond death benefits.
What is an Indexed Universal Life Insurance Policy?
Indexed universal life insurance (IUL) policies are a form of permanent life insurance. As long as you pay your premiums, you will be insured for the rest of your life. A death benefit is paid to your beneficiaries when you pass away.
By having an IUL plan, you can protect your family and accumulate a cash value that can be used when you need it. Typically, it is tied to underlying indexes, such as the Nasdaq or S&P 500. If the index rises or falls, the insurance company credits your policy with the interest annually. The cash value increases over time, which can be used for retirement income.
IULs track index performance but are not directly linked to them. The insurance company holds the funds. Each year, the insurance company sets the interest rate based on the movement in an index. In contrast to directly investing in an index fund, you won’t lose money when the market declines.