Rosie and Bennett are a middle-aged couple. They’re saving for retirement, but need to care for their children and plan for college. Bennett is also looking at life insurance to help protect the family in case something happens to him. At the same time, the couple is funding their IRAs and 401(k)s, but know these won’t address all they need for retirement.
Carl, their Financial Professional, shows them an option — cash value life insurance.
It offers Rosie and Bennett:
• Death benefit protection in case something happens to Bennett during his working years.
• Access to policy available cash surrender values that grow tax-deferred.
• During the couple’s retirement years, any available cash surrender value can be taken from the life insurance policy via withdrawals and loans. So long as the life insurance remains in force, the funds can be received income-tax-free.
• The couple can use these tax-free withdrawals and loans to supplement income in years they need added income without increasing their tax bracket.2
• Withdrawals and loans from life insurance policies are exempt from the 3.8% Medicare surcharge.
There’s a final added benefit:
Life insurance cash values, along with the couple’s IRA and 401(k) accounts aren’t included in the expected family contribution calculations for college financial aid.
• Need life insurance
• Think taxes will increase
• Need more retirement income than Social Security, their IRAs and other current savings can provide
• Already maximum fund their 401(k)s and IRAs