Posted by (InsurGuru©️Insurance Academy column) Most people hear "life insurance"After that, the first reaction was that this is an insurance product that can only be claimed after death by accident. This is indeed life insurance.The use when it first appeared hundreds of years ago.Today, in addition to paying a compensation to the beneficiary after an accidental death, life insurance products have more to exploreFunctions and benefits.When you consider the issue of income after retirement, using life insurance policies as a source of retirement income and maintaining the original lifestyle is a mature solution for many American families.
Use a life insurance policy account to save money for retirement
Accumulate cash value
One of the functional characteristics of a lifetime life insurance account is the ability to build "cash value".The simplest and clearest explanation is that when we deposit a sum of money in the policy account, the balance after deducting the insurance cost becomes the "cash value" in the policy account.This is the core part of using a life insurance account to save money for retirement.From the point of view of the policyholder, opening an account with a financial insurance company and then depositing a sum of money sounds simple, but the complicated tax issues involved behind it, and the negotiation and transfer of interests between commercial organizations and the government, takes a few minutes. Ten years, far beyond the imagination of the insured.
Use a policy account to provide retirement income
OnAmerican Life Insurance GuideOfinsurGuru©️Insurance AcademyIt explains that the cash value account increases over time. When we reach the age when we want to retire after decades, the insurance cash value account becomes a source of our retirement income, and we can withdraw money from it.If the amount withdrawn does not exceed the total amount of premiums paid by us, we do not need to pay tax1.
Borrow money from yourself
If you don’t withdraw money,We can also borrow money from the cash value of the policy account to pay for post-retirement expenses.Because this insurance account is our own, we are borrowing money from ourselves, so technically speaking, we don't need to pay back the money.In practice, it must comply with regulations and related requirements. Therefore, such borrowing will generate a certain amount of interest. At the same time, the amount of borrowing will be deducted from the insured amount (death compensation).
(Recommended reading:What is the difference between borrowing and borrowing money in a life insurance policy?）
Use the money in the policy account to pay for the premium of the policy
If you are going to reassess your retirement plan and the budget is a bit tight, then the holder of the cash value life insurance policy can also use the cash value in the account to pay the upcoming policy premiums.
Is term life insurance useful?
Does 15-year, 20-year term life insurance have cash value?The answer is no.Term life insuranceIt is a pure consumer product without any cash value function.But this brings up two other problems. One is that after I retire, or when I retire,Do you need life insurance?Second, which is better, term life insurance or whole life insurance?
The former question,American Life Insurance GuideNet will discuss and introduce in the following.And the second question, ininsurGuru©️Insurance AcademyIn today’s headline column, we made a simple comparison,Click here to visit.
In general, when yourTerm life insuranceWhen maturity, you need to consider a variety of situations, such as current income, debt, estate planning, self-sufficiency of children, etc.
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1 Source: The Simple Dollar. Cash Value and Life Insurance: How to Pull Money Out of Your Policy. Frank Addessi. October 1, 2016.
