Setting a holistic plan for your financial future should include setting your long-term goals, planning for your retirement, and protecting your family’s fiscal stability. While it is sometimes difficult to consider, including life insurance in your portfolio can provide confidence and surprising financial flexibility.
Cash value life insurance is a type of policy that not only pays out upon the policyholder’s death, but also accumulates value while the policyholder is still alive. The policy can then double as a tax-sheltered investment vehicle.
How it Works
Starting with a lump sum investment or a commitment to monthly premium contributions, or a combination of both, your funds are invested within the policy. After time you are able to take withdrawals from the policy in the form of interest- and income tax-free loans. While there is no obligation to repay these loans within a specified time frame, the more you withdraw the lower your death benefit will be. However, these funds can be a great resource for life’s great expenses, from paying for a child’s college education to supplementing your income during retirement.
Benefits as Long-Term Planning and Retirement Vehicle
The retirement benefits of cash value life insurance policies may be especially advantageous for individuals who are self-employed, rely on rental income, or are not offered an employer-sponsored plan through their company. Investment earnings and withdrawals from the policy are tax-free up to the basis amount. Excess amounts are considered taxable. Consult a tax consultant regarding your specific situation. Additional benefits can include:
- No contribution limits
- No penalties for accessing cash value prior to age 59½
- No required minimum distributions at age 72
Contributing factors when purchasing life insurance can include the health and age of the policyholder. As with any financial investment, the earlier you start contributing, the longer you have to see your investment potentially grow.
Our LPL* Financial Advisors Can Tailor a Plan to Help You Pursue Your Goals
Everyone’s financial situation and vision is unique. Our LPL Financial Advisors are available for a complimentary review of your wealth management strategy, including your insurance policies and plans for your family’s future.
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This article is intended to assist in educating you about insurance generally and not to provide personal service. It may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities, which may affect the type of insurance that would be right for you. Guarantees are based on the claims paying ability of the issuing company. For more information or personal advice, you should consult an insurance professional.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Bay Federal Credit Union and Investment Services at Bay Federal Credit Union are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Investment Services at Bay Federal Credit Union, and may also be employees of Bay Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Bay Federal Credit Union or Investment Services at Bay Federal Credit Union. Securities and insurance offered through LPL or its affiliates are:
|Not Insured by NCUA or Any Other Government Agency
||Not Credit Union Guaranteed
||Not Credit Union Deposits or Obligations
||May Lose Value
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