Posted by When it comes to life insurance, most people think of it as a financial compensation that comes after a person's death.This is just one of the most basic functions of American life insurance.life insuranceIt's just a tool, and many people don't realize that we can use this tool to gain financial and tax advantages.Certain types of life insurance accounts can be an additional source of income for us.This feature can come in handy when you retire. insurGuru©️Insurance AcademyWill be introduced in this article: How does life insurance product pay or increasepensionof.
Use savings dividend insurance to accumulate cash value
Savings dividend insurance, the English name is whole life, Is a type of whole life life insurance.
Savings dividend insurance is much more expensive than term life insurance.However, term life insurance is usually guaranteed for up to 30 years. It is a proper "consumer product" and has no cash value.andSavings and Dividend InsuranceAlthough it is expensive, the money deposited is accumulated and risk-free growth in this policy account. We can use "withdraw" or "withdraw" from this account after many years.Loan"The way to withdraw money and use it."
Different savings and dividend insurance products provide different earning interest, orPolicy dividendsPolicy.When the policy account has a certain cash value, we can "borrow" the cash value in a "tax-free" way.If we get annual dividends, we don’t have to pay taxes on this capital gain.Unless this dividend has exceeded the total amount of premiums paid by us, we only need to consider the issue of taxation, but this situation is very, very rare.
Use savings dividend insurance as a supplementRetirement incomeIf you do, you have to figure out how much money we plan to borrow at that time.When you calculate your accounts when planning your policy, you can use Whole Life as a stable source of income for retirement. Technically speaking, we don't need to repay the money borrowed. But what needs to be understood is that when we pass away, any outstanding loan amount will be deducted from the beneficiary’s claim.
Use universal insurance to increase retirement income
Universal insurance, The English name is Universal Life, abbreviated as UL.
Universal insurance is another whole life insurance, and its working mechanism is different from that of savings and dividend insurance.
We can still accumulate cash value through the universal insurance policy account, but one difference is thatSavings Participating InsuranceThe payment period and the premium amount are one piece, while universal insurance can independently adjust the premium amount according to your own living conditions.
Another difference is that after we apply for a universal insurance policy, we can choose to increase or decrease the insured amount according to our living conditions.
Finally, we can also choose to offset the payment of our insurance premiums with the annual income to the account.
Universal insurance is attractive to people who are about to enter retirement age.Because this type of product has certain functional components of the "investment" concept, the specific method is as follows: a part of the premium we deposit is used to pay the cost of insurance, and the rest of the premium is based on the investment channel options given in the policy account. Choose to put in a "growth" option.Our choice determines the amount of return.
For universal insurance policy accounts, we can lend the accumulated cash value from the cash value account. This income acquisition method is "tax-free".
The only disadvantage of a universal insurance policy account is that the amount of return is not guaranteed.When we choose universal insurance and its derivatives, we need to collaborate professionallybrokerOr a consultant, carefully understand the specific characteristics of a specific product.
Convert whole life insurance to annuity
If we had applied for a lifetime life insurance policy earlier, and when we were about to retire, we had successfully accumulated a large amount of cash value in the policy account, then at this timeWe can transfer a lifetime life insurance policy accountConvert to annuity account, Create a fixed source of retirement income for yourself.
Annuity is ours fromlife insuranceA contract purchased by the company.Usually, when we apply for an annuity, we inject a sum of money into the annuity account at a time, and then the life insurance company pays us a sum of money regularly during its validity period (usually within a lifetime).Life annuities will be paid until our death. Depending on the type of annuity, insurance companies may continue to pay our spouses even after our death.
If we want to take out all the money in the life insurance policy account at once, this income will be taxed.However, using the standard1035 conversion program,It can help us convert our life insurance policy account into an annuity account "tax-free".The disadvantage is that we will lose the death benefit benefits of life insurance, but the advantage is that we immediately get cash flow.If we hold multiple insurance policies and we are close to retirement, we need a stableRetirement income, Then the 1035 conversion process is also a financial option for obtaining pensions.
Article summary
To build a sound retirement income plan for yourself requires a systematic assessment of our financial situation, savings and investment options.American Life InsuranceGuide.com advocates Learn Before You BuyLBYB principle, After comprehensively understanding the characteristics of various retirement tools and effective planning methods, we canbrokerCommunicate.
Simultaneously,1035 conversion programIt is a professional process. The entire operation needs to comply with the IRS regulations to be truly "tax-exempt." Wrong operations will cause the insured to be taxed repeatedly and cause economic losses.Please be professionalbrokerOr with the assistance of a consultant, you can find a retirement income plan that really suits your personal circumstances.
(American Life Insurance Guide insurGuru©️Insurance CollegeColumn)
