Certainly, there are a few ways to use a good whole life policy in retirement. The most common is to "borrow" a monthly payment from your cash value. The loan will be at a very low interest rate. But, because it is a loan it is free of income tax. Second by using the loan provision you keep your death benefit intact for your loved ones. I suggest sitting down with your agent and running the different options before deciding on how to proceed.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A whole life insurance policy is an extremely flexible product that can meet many needs in retirement. The most obvious need is death. It is obvious that retirement always ends in death. Death is not inexpensive. The proceeds of a whole life insurance policy can pay off some or all of those expenses. After a certain age term policies cannot be written at any price.
I recently had a client who forgot that there was a life policy on her husband. She was paying his funeral expenses on an installment plan. I discovered the policy and brought it to her attention. She was delighted.
Another use of a whole life policy is to transfer property to heirs. Often a person will want to leave money to children, grandchildren or a favorite charity. They will then try to conserve their retirement assets so that money will be available when the die. Unfortunately they often rob themselves of life’s simple pleasures in their drive to provide that inheritance. A life insurance policy can do that at the beginning of retirement leaving the person the balance of assets to spend as they wish.
Some people have estates that are subject to estate tax. The problem with estate tax is that if there isn’t cash to pay the taxes, assets are often sold at below market value to pay the tax. Having cash can make the difference of keeping the family business going, maintaining the family farm or closing them up for taxes. Since that can happen at any time, a whole life policy is particularly flexible in that regard.
Whole life insurance is often used when a person wants to leave a specific valuable asset to one child but wants to treat all the children in the same manner. The heirs that are not going to get that valuable asset could receive equivalent proceeds from a whole life policy and everyone would be happy.
A whole life policy is often used to purchase the interest of another party in a business. In this case the surviving partners don’t particularly want to share everything with a widow who may not be acquainted with the business. A whole life policy can provide the cash to take care of that situation by giving the survivors the funds they need to purchase the widow’s interests.
Sometimes whole life insurance is used to fund day to day living expenses in retirement. I just finished a comparison that showed that a whole life policy performed as well as a fixed annuity in accumulating money for retirement and that it did that with the promise to pay the full benefit should the person die before retiring. The whole life policy has non-forfeiture provisions which can pay a lifetime stream of income if desired or the policy would also give the person the flexibility to use the policy in other ways depending upon future, unforeseen events.
This may sound strange but I often get requests for whole life insurance from older individuals. They seem to appreciate the value of lasting protection at a fixed price.
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I recently had a client who forgot that there was a life policy on her husband. She was paying his funeral expenses on an installment plan. I discovered the policy and brought it to her attention. She was delighted.
Another use of a whole life policy is to transfer property to heirs. Often a person will want to leave money to children, grandchildren or a favorite charity. They will then try to conserve their retirement assets so that money will be available when the die. Unfortunately they often rob themselves of life’s simple pleasures in their drive to provide that inheritance. A life insurance policy can do that at the beginning of retirement leaving the person the balance of assets to spend as they wish.
Some people have estates that are subject to estate tax. The problem with estate tax is that if there isn’t cash to pay the taxes, assets are often sold at below market value to pay the tax. Having cash can make the difference of keeping the family business going, maintaining the family farm or closing them up for taxes. Since that can happen at any time, a whole life policy is particularly flexible in that regard.
Whole life insurance is often used when a person wants to leave a specific valuable asset to one child but wants to treat all the children in the same manner. The heirs that are not going to get that valuable asset could receive equivalent proceeds from a whole life policy and everyone would be happy.
A whole life policy is often used to purchase the interest of another party in a business. In this case the surviving partners don’t particularly want to share everything with a widow who may not be acquainted with the business. A whole life policy can provide the cash to take care of that situation by giving the survivors the funds they need to purchase the widow’s interests.
Sometimes whole life insurance is used to fund day to day living expenses in retirement. I just finished a comparison that showed that a whole life policy performed as well as a fixed annuity in accumulating money for retirement and that it did that with the promise to pay the full benefit should the person die before retiring. The whole life policy has non-forfeiture provisions which can pay a lifetime stream of income if desired or the policy would also give the person the flexibility to use the policy in other ways depending upon future, unforeseen events.
This may sound strange but I often get requests for whole life insurance from older individuals. They seem to appreciate the value of lasting protection at a fixed price.