Life insurance &
Retirement Tax Strategies
You may not realize this, but life insurance may be part of your retirement tax strategies. Why? Because life insurance is not an investment and, therefore, has different tax code to follow. For example, with an indexed universal life insurance policy (IUL), it is possible to retire tax-free.* An IUL gives you access to your money via income payments. But, since it isn’t a retirement plan with money directly in the stock market, there is no tax on the income you tax. Of course, each person’s financial situation impacts whether or not an IUL is the right choice. So, be sure to talk with us to find out more.
Tax Free Retirement Options
We’ve all heard that there are two things we can count on: death and taxes. However, depending upon how you design your retirement tax strategies, you may be able to have income, tax-free.* When you think about taxes, do you think they will go up or down over time? Most people think a rise in taxes is more likely than a drop. If that’s true, how will an increase in taxes affect your retirement income? Certainly, tax law and tax code changes do have an effect on retirement. For example, estate tax laws can change how much you can leave behind for your loved ones. To be sure, knowing your options regarding taxes and retirement is key to your long-term success. In fact, life insurance may be an important part of your plan.
Life Insurance Retirement Tax Strategies
Although you may not think of life insurance as a vehicle for retirement income, it actually can be used for that purpose. Certain retirement accounts and investments have tax regulations that require taxes to be paid on earnings. In addition, many accounts call for you to pay taxes on withdrawals. However, a life insurance policy such as an IUL is not subject to the same tax code. In fact, an IUL does not have money in the stock market. Therefore, your money is not at risk, either. So, IULs may provide a way for retirees to receive an income, tax-free.* Of course, every policy has its own conditions and terms, so be sure to reach out to find out which options are available for you.
Can You Use an IUL To Retire?
Is it possible that a permanent life policy such as an IUL may work for you? A few things will help you decide. Below is a list of some criteria to consider. Our team at Green Line NW is here to help answer your questions, and walk you through the possibilities. In addition, we can go over any current policies or retirement account you have and determine some next steps. Together, we can find out if a tax-free retirement is in your future.
Do any of the following apply to you?…
- Do you believe taxes might be higher in the future?
- Think you should plan for a possible tax increase?
- Have an option to increase income if taxes go up in retirement?
- Know the impact of taxes on your beneficiaries?
- Wonder how taxes may impact your estate plan?
- Looking for tax-free retirement income ideas?
- Would rather pay taxes now instead of at a possibly higher rate later?
Indexed Universal Life (IUL) insurance has several benefits for certain situations. Of course, no one can be certain what tax rates will be down the road. However, we also can’t know how those rates may impact your retirement. What you can do, though, is to make a plan. IUL insurance may be an option worth exploring. Some retirees also appreciate the peace of mind this type of plan provides. Their money is safe from market loss, and they are able to tax an income, tax-free.*
Attend one of our “Greenline” or “Tax-Free Retirement” virtual or in-person workshops to learn more. Or, if you prefer, simply call our office for a no-cost and no-obligation meeting. We’re here to answer all your life insurance and retirement tax strategies questions.
*Proceeds from an insurance policy are generally income-tax-free, and if properly structured, may also be free from estate tax. Income-tax-free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans. Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce the death benefit, or cause the policy to lapse. This assumes the policy qualifies as life insurance and is not a modified endowment contract. The Host and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. This content is not intended to serve as the basis for any investment or purchasing decisions, nor does it recommend or involve the purchase, holding, or sale of a security. All figures herein are hypothetical and for illustrative purposes only to explain general concepts. No figure is to be relied upon as being accurate nor a guarantee or projection and is meant only as a partial overview of some relevant features and benefits of general insurance products that may be in the marketplace, and whose availability will be dependent on the State of residence of the consumer, and their individual suitability for the product they are wanting to purchase. Where insurance products are mentioned, any and all guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.