Posted by "Life insurance" is not a strange thing. In the traditional concept, many people think thatLife insurance means that after we pass away, we will pay a sum of money to our children or beneficiaries.But with the development of society and the needs of family retirement planning, life insurance has more benefits worth exploring.
For example, before we prepareEarly retirementTime, how do we treat our life insurance policy asRetirement incomeTo maintain the original lifestyle and quality are the 5 questions explored and answered in this article.
5 Steps to Using Life Insurance to Provide Retirement Income
1. Establish and accumulate cash value
This makes a life insurance account look like a bank account. We deposit premiums. After deducting insurance-related costs and expenses, the remaining balance is the "cash value."
It is the function of "cash value" that provides several different uses for post-retirement life insurance.
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2. Withdraw retirement income from your life insurance account
Simple Dollar, a well-known personal financial management website in the United States, used a column to point out in detail that the balance in the cash value account will increase over time.The accumulated amount can be used as the retirementSource of incomeextract.
And as long as the amount withdrawn does not exceed the amount of premiums you have paid, there is no tax1.
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3. Borrow money from yourself
Another function of cash value is that you can use life insurance to supplement your retirement income by borrowing money from the cash value in your policy account.This is tantamount to lending to the future self.
Technically speaking, you don’t need to repay the money even though it’s said that interest will be accrued. Ultimately, the accumulated loan amount will be deducted from the death claim (that is, the amount paid to your family at the time of your death).
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4. Use the cash value of the policy to pay for retirement premiums
If your budget is tight before retirement, or you encounter temporary financial problems, and your family’s expenditure needs to be re-planned, then for policyholders with body-type life insurance, you can choose to use the cash value of your policy , Pay the upcoming premium.
5. What about term life insurance?
The previous points are shared protection for life insurance, so forTerm life insuranceThis type of insurance can be used in the same way with term life insurance that provides 10-year, 20-year, or 30-year coverage?the answer is negative, Because term life insurance has no "cash value" and is purely a consumer product.
Therefore, for considerationTerm life insuranceFor policyholders, this raises another topic worth discussing:Do I need life insurance after retirement?
When yourTerm life insuranceWhen the expiration date is about to expire, you should consider this important decision by considering the overall factors such as current income, debt, wealth planning, estate planning, and the child's self-sufficiency.
Generally speaking, we buy when we are youngTerm life insuranceAt the time, priority is given to those who can "upgrade to whole life insurance at a healthy rate at a young age"Term life insurance, Will help us retain the right to choose, which can save us a fee when upgrading to whole life insurance. (Finish)
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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.
